Reported in New York Official Reports at Evanston Ins. Co. v P.S. Bruckel, Inc. (2019 NY Slip Op 50589(U))
Evanston Insurance
Company, Plaintiff(s),
against P.S. Bruckel, Inc., State of New York, Henrique Staveski and Izabel Camargo, Defendant(s). |
13-60034
PLAINTIFF’S ATTORNEY:
TRESSLER LLP
ONE PENN PLAZA,
SUITE 4701
NEW YORK, NY 10119
DEFENDANTS’ ATTORNEYS:
TREVETT CRISTO SALZER PC
TWO STATE STREET, SUITE 1000
ROCHESTER, NY 14614
NEW YORK STATE DEPT OF LAW
300 MOTOR
PARKWAY
HAUPPAUGE, NY 11788
SACKS & SACKS ESQS
150 BROADWAY
NEW YORK, NY 10038
Sanford Neil Berland, J.
Upon the reading and filing of the following papers in this matter: (1) Notice of Motion, [*2]by defendant New York State, dated September 5, 2018, and supporting papers; (2) Notice of Cross-Motion, by defendant PS Bruckel, dated November 8, 2018, and supporting papers; (3) Affirmation in Opposition, by plaintiff, dated November 16, 2018, and supporting papers; and oral argument having been heard on February 14, 2019, it is
ORDERED that motions sequenced 007 and 009 are hereby denied without prejudice to renewal upon a more complete record; and it is further
ORDERED that all attorneys of record in this action are directed to appear before this Court in Part 6 for a compliance conference on April 24, 2019 at 10:00am at the Supreme Court located at One Court Street, Riverhead, New York; and it is further
The parties are reminded that pursuant to the Rules of the Chief Judge (22 NYCRR 202.27) the Court may without further notice grant judgment by default or order an inquest against any defendant who fails to appear or the Court may dismiss the action against any Plaintiff who fails to appear; or make such orders as may be just.
Background
This declaratory judgment action arises from a worksite accident that occurred on July 8, 2008, when Henrique Staveski, an employee of P.S. Bruckel, Inc. (“Bruckel”), fell from scaffolding while performing sandblasting work on the Route 135 overpass at Route 24 in Nassau County. Bruckel had been contracted by the State of New York to repaint highway bridges along Route 135, including the bridge where Staveski fell, and Staveski and his wife, Izabel Camargo, brought a personal injury action against the State in the Court of Claims, alleging that the State had, among other things, been negligent and reckless in maintaining the worksite where he fell and had violated §§ 200, 240 and 241 of the Labor Law (Staveski and Camargo v. State of New York (Department of Transportation), Claim No. 115633) (the “Staveski action”). When Evanston Insurance Company (“Evanston”) denied the State’s claim for coverage for the claims asserted against it in the Staveski action (the “Staveski claims”) under a certificate of insurance and various insurance policies that Bruckel had procured from Evanston for itself or for the State, the State commenced a third-party action against Evanston, seeking a declaratory judgment that Evanston was required to defend it against and indemnify it for the Staveski claims. Eventually, Evanston agreed to provide coverage for the Staveski claims against the State under one of the policies referenced in the certificate of insurance [FN1] and to waive that policy’s $10,000 deductible, and the State, by stipulation dated May 19, 2009, discontinued its third-party action against Evanston with prejudice. Evanston balked, however, at the State’s request that the law firm retained to defend the State in the Staveski action assert a third-party claim on behalf of the State against Bruckel in the Court of Claims litigation. On March 9, 2012, [*3]the State commenced a separate indemnification, contribution and breach of contract action against Bruckel in this court, State of New York v. P.S. Bruckel, Inc., Index no. 7744-2012 (Sup Ct, Suffolk County) (“State v. Bruckel” or the Bruckel action”).
Pursuant to a January 3, 2014 Stipulation of Settlement and Discontinuance, the Staveski claims against the State were settled for a total of $2,725,000 and the Staveski action was discontinued with prejudice, with Evanston paying $1,000,000 and the State the balance of the settlement. The State v. Bruckel action, however, remained pending. Although it appears to be undisputed that Bruckel’s President, Peter S. Bruckel, was personally served with the summons and complaint in that action on March 12, 2012, Bruckel did not forward the pleadings or any other paper with which Mr. Bruckel had been served to Evanston nor did it notify Evanston of the commencement of the action or take any steps to tender the defense of the claims asserted against it to Evanston [FN2] . The State, however, asserts that although it did not provide Evanston with copies of the summons and complaint in the State v. Bruckel action until March 2013, nearly a year after it commenced the action, it had alerted Evanston of its intention to commence that action before it did so, informed it within a month after it filed the summons and complaint that it had commenced the action, and then, after Bruckel failed to appear in the action, informed Evanston of Bruckel’s default and of the State’s intention to seek a default judgment. Emails, adjuster notes and one or more “trial reports” to Evanston prepared by the attorney retained by Evanston to defend the State in the Staveski action corroborate the State’s account but also corroborate Evanston’s contention that despite several requests it made to the State to be provided with copies of its summons and complaint in the State v. Bruckel action, the State did not do so until March 1, 2013. Two weeks later, by letter dated March 15, 2013, addressed to Bruckel, with copies both to the State and to the attorneys for the Staveskis and for Camargo, the law firm of Goldberg Segalla LLP, as attorneys for Evanston’s claim service manager and on behalf of Evanston, issued a “Disclaimer of Coverage,” dated March 15, 2013, for the claims asserted by the State against Bruckel. Among other things, the letter asserted that Bruckel, the State, Staveski and Camargo had all violated the policies’ “prompt and/or immediate notice of any occurrence, claim or suit” requirements, and that Bruckel had breached policy provisions requiring “Bruckel and any other involved insured to immediately send Evanston copies of any demands, notices, summons, or legal papers received in connection with any claim or ‘suit’.” Citing several provisions of the polices, the letter further asserted that “multiple policy exclusions and limitations to coverage contained in the Evanston policies apply to the claims and causes of action asserted by the State of New York in the [Bruckel] lawsuit.”
The Current Action – Procedural History
The summons and complaint in this declaratory judgment action by Evanston was filed on March 18, 2013, just a few days following the utterance of the Goldberg Segalla disclaimer letter. After Bruckel’s motion to the Supreme Court in Livingston County, to change the venue of this action to that county — where Bruckel maintains its principal place of business — was [*4]denied on the dual grounds that Bruckel had waited too long to file its motion based upon improper venue (see CPLR 510[1] and 511[b]) and that, in any event, a motion seeking, in whole or in part, a change of venue for the convenience of witnesses (CPLR 510[3]) must be made in the court where the action has been brought (see Evanston insurance Company v. P.S. Bruckel, Inc., et al., Index No. 0393-2013, Decision & Order dated July 15, 2013 [Sup Ct, Livingston County, Wiggins, J.]), Bruckel filed a motion for change of venue pursuant to CPLR 510[3] in this court. The State then moved for leave to amend its answer to assert a counterclaim against Evanston for a declaratory judgment that Evanston’s “denial and disclaimer of coverage to indemnify the State in the [Staveski action] was not timely, proper, and valid” (emphasis in original). Evanston opposed both motions and cross-moved for summary judgment in its favor declaring that because of breaches of the notice provisions of its insurance policies, it had no duty to defend or indemnify Bruckel — “or any other person or entity” — for the claims in the State’s underlying action against Bruckel for indemnification and contribution or, alternatively, that the employer’s-liability and breach-of-contract exclusions of the Evanston policies excluded coverage for the State’s claims against Bruckel. Both Bruckel and the State opposed Evanston’s cross-motion, and Bruckel cross-moved for summary judgment in its favor, inter alia, declaring that Evanston is required under the CGL and Excess liability policies to defend and indemnify it in the State’s action against it.
In a Decision and Order dated December 30, 2014 (the “December 30, 2014 Decision and Order”), Justice Asher denied Bruckel’s motion to change the venue of the action to Livingston County for Bruckel’s failure adequately to demonstrate that the convenience of material witnesses would be served and the ends of justice promoted by transferring the action to Livingston County; denied the State’s motion to amend its answer to assert a counterclaim for a declaration of coverage under the CGL and excess liability polices as foreclosed by the May 19, 2009 stipulation that discontinued the State’s third-party claims against Evanston in the Staveski action with prejudice; denied Bruckel’s cross-motion for summary judgment granting a declaratory judgment in its favor as improper, as Bruckel had failed to interpose a counterclaim for a declaratory judgment [FN3] ; and held that although Evanston had carried its burden of establishing, prima facie, an entitlement to summary judgment for Bruckel’s failure to satisfy the policies’ notice requirements, including the fact that the March 2012 summons and complaint in the State’s action against Bruckel had not been delivered to Evanston until March 2013, issues of fact concerning the timeliness of Evanston’s disclaimer of coverage and as to whether Evanston had been provided with “sufficient notice” of the Bruckel action by others — specifically, John L. Belford, IV, the Assistant Attorney General who was assigned to represent the State’s interests in the Staveski action and who commenced the State’s action against Bruckel, and Lawrence Buchman, the attorney retained by Evanston to represent the State in the Staveski action — required that Evanston’s cross-motion be denied. With respect to this last holding, Justice Asher explained that:
[D]efendants raise triable issues of fact as to whether Evanston had notice of the [State v. Bruckel] lawsuit and whether it failed to issue a timely disclaimer. The failure of an [*5]insured to timely notify the insurer of a claim does not excuse the insurer’s failure to timely disclaim coverage (Schulman v Indian Harbor Ins. Co., 40 AD3d 957 [2d Dept 2007]). Indeed, an insurer waives its affirmative defenses of late notice if it fails to disclaim coverage “as soon as is reasonably possible” (Hermitage Ins. Co. v Arm-ing, Inc., 46 AD3d 620, 621, 847 NYS2d 628 [2d Dept 2007]). Insurance Law § 3420(d)(2) requires written notice of disclaimer to be given “as soon as is reasonably possible” after the insurer learns of the grounds for disclaiming liability (Sirius Am. Ins. Co. v Vigo Const. Corp., 48 AD3d 450, 451, 852 NYS2d 176 [2d Dept 2008]; see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 65, 769 NYS2d 459 [2003]). The reasonableness of the delay is measured from the time when the insurer “has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage” (Allstate Ins. Co. v Gross, 27 NY2d 263, 264, 317 NYS2d 309 [1970]. Sirius Am. Ins. Co. v Vigo Const. Corp., supra). It is the insurer’s responsibility to explain its delay in giving written notice of disclaimer, and an unsatisfactory explanation will render the delay unreasonable as a matter of law (Tully Const. Co., Inc. v TIG Ins. Co., 43 AD3d 1150, 1151, 842 NYS2d 528 [2d Dept 2007]; see Sirius Am. Ins. Co. v Vigo Const. Corp., supra).
(Decision and Order, December 30, 2014, at 4-5, emphasis supplied). “At issue,” Justice Asher held, “is whether P.S. Bruckel failed to provide timely notice of the lawsuit commenced by the State of New York against it,” further explaining that
While P.S. Bruckel did not satisfy its obligation to provide prompt notice by forwarding the summons and complaint to Evanston Insurance in a timely [manner], it is unclear whether Evanston Insurance was put on notice of the existence of the lawsuit and the potential implications it held for its policy. Pursuant to the Insurance Law, an injured person or any other claimant may provide sufficient notice to an insurer (Ins. Law 3420[a][3]; Rose v. State, 265 AD2d 473, 696 NYS2d 473 [2d Dept 1999]).
(Id. at 5). Given Assistant Attorney General John Belford’s assertion that he had “informed Pat Dunstan, senior claims examiner for Markel Services Incorporated [FN4] , of the [Bruckel] lawsuit when it was commenced” and attorney Buchman’s April 2012 trial report to Dunstan, “indicating that the State of New York had commenced an action against P.S. Bruckel,” Justice Asher concluded that “triable issues of fact remain as to whether Evanston Insurance had notice of the lawsuit,” thereby requiring the denial of Evanston’s cross-motion for summary judgment validating its disclaimer of coverage and relieving it of any obligation to defend or indemnify Bruckel against the State’s claims.
Evanston appealed the denial of its cross-motion for summary judgment. In a decision dated May 3, 2017, the Appellate Division affirmed Justice Asher’s decision and order to the extent it had been appealed by Evanston (Evanston Ins. Co. v P.S. Bruckel, Inc., 150 AD3d 693 [2d Dept 2017]). Citing its earlier decision in Nationwide Ins. Co. v Shedlick, 274 AD2d 519 [2d Dept 2000] — which upheld an order permanently staying arbitration of a claim for underinsured motorist benefits where the claimant gave the insurer prompt notice of his claim for coverage under his automobile insurance policy’s supplemental uninsured motorists endorsement but failed for 2-1/2 years to comply with the endorsement’s requirement that he “immediately” forward [*6]copies of the summons and complaint to the insurer if he commenced a lawsuit against the underinsured tortfeasor — and the Court of Appeals’ decision in American Tr. Ins. Co. v Sartor, 3 NY3d 71, 75-76 [2004] — which held that the proviso in Vehicle & Traffic Law § 370(4), that failure to comply with that statute’s requirement that the operator of a vehicle for hire give notice to the insurer or surety for the vehicle within five days of an accident (violation of which is a misdemeanor) “shall not affect the liability of the surety or insurer,” does not obviate the right of the insurer to condition coverage upon its being provided with timely notice of the initiation of litigation against the insured and to disclaim coverage where timely notice is not received from the insured or other persons who are entitled to provide notice pursuant to Insurance Law § 3420(a)(3) — the Appellate Division noted that Evanston had “established, prima facie, that Bruckel failed to comply with the condition in the subject policy that required it to ‘immediately’ forward to [Evanston] copies of any legal papers received in connection with a lawsuit” (Evanston Ins. Co. v P.S. Bruckel, Inc., 150 AD3d at 694), as the State had commenced the action against Bruckel and served it with the summons and complaint in March 2012 but copies of those papers were not received by Evanston until March 2013. The Appellate Division also noted that because the “subject policy” was issued before Insurance Law § 3420 was amended, it was not necessary for Evanston to show that it had been prejudiced by the failure to give it timely notice. Nonetheless, it agreed that because “‘[t]he failure of an insured to timely notify the insurer of a claim does not excuse the insurer’s failure to timely disclaim coverage’ (Delphi Restoration Corp. v. Sunshine Restoration Corp., 43 AD3d 851, 852, 841 N.Y.S.2d 684; see Atlantic Cas. Ins. Co. v. RJNJ Servs., Inc., 89 AD3d 649, 651, 932 N.Y.S.2d 109),” and “‘[t]he timeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage’ (Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056, 576 N.Y.S.2d 87, 581 N.E.2d 1342 [1991]; see First Fin. Ins. Co. v. Jetco Contr. Corp., 1 NY3d 64, 68—69, 769 N.Y.S.2d 459, 801 N.E.2d 835 [2003]),” there were “triable issues of fact as to whether [Evanston] acquired knowledge of the commencement of the [State v. Bruckel] action in April 2012, or, at the latest, October 2012, and thus, whether it timely disclaimed coverage in March 2013, on the basis of, inter alia, late receipt of a copy of the summons and complaint” (Evanston Ins. Co. v P.S. Bruckel, Inc., 150 AD3d at 694)[FN5] .
The Current Motion and Cross-Motion.
Some [FN6] discovery having been conducted following the Appellate Division’s decision, the [*7]State now moves for summary judgment in its favor dismissing Evanston’s complaint and requiring Evanston to defend and indemnify Bruckel in the State’s action against Bruckel on the ground that Evanston’s disclaimer of coverage for Bruckel was untimely and, therefore, ineffective. Bruckel, having been granted leave to amend its answer to assert a counterclaim for the relief sought in its prior cross-motion for summary judgment (see Order dated December 23, 2015 (Asher, J.)), cross-moves [FN7] again for summary judgment in its favor, both dismissing Evanston’s complaint and declaring that Evanston is required to defend and indemnify it in the State’s action against it, on the same ground as the State’s motion. Neither moving party disputes that if the timeliness of Evanston’s disclaimer of coverage were measured from the date Evanston was provided with a copy of the summons and complaint, Evanston’s disclaimer would have been sufficiently prompt. Both argue, however, that Evanston knew even before the Bruckel action was commenced that the State intended to bring such an action against Bruckel, that Evanston knew by April 2, 2012, when Buchman, the attorney it had retained to represent the State in the Staveski action, informed it, in a pretrial report to Patricia Dunstan, the adjuster handling the claim for Evanston, that he had been told by Belford, the Assistant Attorney General assigned to the matter, that the State had “instituted an action against P.S. Bruckel in State Court for indemnification”; that any doubt about the commencement of the Bruckel action — and Bruckel’s failure to notify Evanston of that fact and to provide it with copies of the pleadings that had been served upon it — would have been dispelled in May 2012, when Buchman, by his own account, would have reported to Dunstan conversations he had with Belford regarding Bruckel’s default in the State’s action against it and Belford’s request for samples of CPLR 3215 default notices; a conversation Belford had with Dunstan on October 26, 2012, in which Belford told Dunstan that he had a suit pending against Bruckel and was in the process of filing a default against Bruckel, and also in which Dunstan requested “a copy of the suit”; and a November 29, 2012 “Claims Note” made by Dunstan concerning following up with Belford “related to getting suit against P.S. Bruckel” and a telephone conversation she then had with Belford that day in which he again told her that Bruckel had been served and that he would be filing a default judgment against them, and in which Dunstan again requested a copy of the State’s complaint against Bruckel [FN8] . Bruckel also makes the further argument that because Evanston had been [*8]“promptly put on notice” of both the underlying occurrence and of the commencement, shortly thereafter, of the Staveski action, and therefore had early and ample opportunity to, among other things, investigate the underlying claim and to assess the State’s entitlement to indemnification from Bruckel and to coverage under Bruckel’s insurance policies; because Evanston did in fact so investigate and “noted that the Staveski claim could far exceed policy limits”[FN9] ; and because Evanston was aware of the State’s action against Bruckel months before it was provided with copies of the pleadings in that action, not only was Evanston’s disclaimer of coverage fatally belated, but Evanston cannot show any prejudice from Bruckel’s failure promptly to forward to it the pleadings with which it had been served.
Evanston opposes both motions, arguing, among other things, that Insurance Law § 3420(d)(2), which requires that written notice of a disclaimer of liability or denial of coverage “for death or bodily injury arising out of . . . [an] accident occurring within this state” shall be given “as soon as is reasonably possible . . . to the insured and the injured person or any other claimant,” does not apply because the State v. Bruckel action seeks indemnification and contribution and is not a claim “for death or bodily injury”; that even if Insurance Law § 3420(d)(2) does apply, Evanston’s disclaimer was timely, as Evanston acted diligently in conducting and completing its investigation — which included determining that Bruckel had been served with the summons and complaint a year earlier — and in issuing its disclaimer on March 15, 2013, eleven days after it first “received”[FN10] the complaint in the Bruckel action; and, alternatively, that in the event the court does not conclude that Evanston’s disclaimer was timely on the undisputed facts, that there are, then, issues of fact concerning whether Evanston’s waiting until shortly after it had been sent copies of the State’s summons and complaint against Bruckel, confirming that the action had in fact been brought and revealing its actual allegations, rendered its disclaimer untimely.
Discussion
Summary judgment helps “expedite all civil cases by eliminating . . . claims which can properly be resolved as a matter of law” (Andre v Pomeroy, 35 NY2d 361, 364, 362 NYS2d 131 [*9][1974]). A party seeking summary judgment has the burden both of “tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v Prospect Hosp., 68NY2d 320, 324, 508 NYS2d 923, 925 [1986]; see Granados v Cox, 43 AD3d 391, 392, 840 NYS2d 427, 428 [2d Dept 2007]), and of “demonstrating its entitlement to judgment as a matter of law” (Blackwell v Mikevin Mgt. III, LLC, 88 AD3d 836, 837 [2d Dept 2011]). The motion must be “supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions” (CPLR 3212 [b]). However, a “movant fails to satisfy its prima facie burden by merely pointing out gaps in the plaintiff’s case” (Blackwell v Mikevin Mgt. III, LLC, supra, 88 AD3d at 837, citing Englington Med., P.C. v Motor Veh. Acc. Indem. Corp., 81 AD3d 223 [2011]; Shafi v Motta, 73 AD3d 729, 730 [2010]; Doe v Orange-Ulster Bd. of Coop. Educ. Servs., 4 AD3d 387, 388 [2004]). Moreover, failing to make a prima facie showing will result in the motion’s denial, “regardless of the sufficiency of the opposing papers” (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 852, 487 NYS2d 316 [1985]). If the movant establishes a prima facie case of entitlement to summary judgment, the burden shifts to the party opposing the motion to produce “evidentiary proof in admissible form sufficient to require a trial of material questions of fact” (Zuckerman v City of New York, 49 NY2d 557, 562, 427 NYS2d 595, 597 [1980]).
As the Appellate Division, quoting from the Court of Appeals decision in Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056 [1991], ruled in addressing Evanston’s appeal from the denial of its earlier cross-motion for summary judgment, “‘[t]he timeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage.'” see First Fin. Ins. Co. v. Jetco Contr. Corp., 1 NY3d 64, 68—69, 769 N.Y.S.2d 459, 801 N.E.2d 835).” Although Insurance Law § 3420(d)(2) requires that an insurer “give written notice as soon as is reasonably possible” when it disclaims or denies coverage “for death or bodily injury,” that statute does not apply to claims for “common-law indemnification/contribution, contractual indemnification and breach of contract for failure to procure the promised liability insurance” (Preserver Ins. Co. v Ryba, 10 NY3d 635, 638-39, 642 [2008]) (holding, in action brought by New York worksite owner against New Jersey contractor who employed a worker who was gravely injured when he fell from scaffolding while performing work on plaintiff’s premises, that “even if the policy were ‘issued for delivery’ in New York, Preserver still would not be barred from denying coverage for Almeida’s breach of contract claim since Insurance Law § 3420 (d) requires timely disclaimer only for denials of coverage ‘for death or bodily injury'”)). Rather, the test is whether the insurer is foreclosed by common law waiver or estoppel principles from asserting policy exclusions and conditions or otherwise denying coverage (see KeySpan Gas E. Corp. v Munich Reins. Am., Inc., 23 NY3d 583, 590-91 [2014]).
In KeySpan Gas E. Corp., supra, the Long Island Lighting Company (“LILCO”) and its assignee, Keyspan, sought coverage from the defendant insurers for claims for environmental damage at, or attributable to, manufactured gas plants sites previously owned or operated by LILCO. The Appellate Division held that although LILCO had failed to provide timely notice of the environmental occurrences to the defendants, there were triable issues of fact as to whether the defendant insurers, which had sent LILCO letters reserving their rights and defenses, including the defense of late notice, had “issued written notice of disclaimer on the ground of late [*10]notice as soon as is reasonably possible after first learning of the accident or of grounds for disclaimer of liability” (Long Is. Light. Co. v Allianz Underwriters Ins. Co.,104 AD3d 581, 582 [1st Dept 2013]). On the insurers’ appeal on certified question [FN11] , the Court of Appeals held that the Appellate Division had applied an incorrect standard to the issue of whether the defendant insurers had waived the right to disclaim coverage for LILCO’s late notice to them:
“Where, as here, the underlying claim does not arise out of an accident involving bodily injury or death, the notice of disclaimer provisions set forth in Insurance Law § 3420(d) are inapplicable” (Vecchiarelli v. Continental Ins. Co., 277 AD2d 992, 993, 716 N.Y.S.2d 524 [4th Dept.2000]; see e.g. Ryba, 10 NY3d at 642, 862 N.Y.S.2d 820, 893 N.E.2d 97 [insurer “not required by Insurance Law § 3420(d) to make timely disclaimer of coverage” for breach of contract claim][FN12];Travelers Indem. Co. v. Orange & Rockland Utils., Inc., 73 AD3d 576, 577, 905 N.Y.S.2d 11 [1st Dept.2010], lv. dismissed, 15 NY3d 834, 909 N.Y.S.2d 8, 935 N.E.2d 799 [2010]; Topliffe v. U.S. Art Co., Inc., 40 AD3d 967, 969, 838 N.Y.S.2d 571 [2d Dept.2007]; Fairmont Funding v. -Utica Mut. Ins. Co., 264 AD2d 581, 581, 694 N.Y.S.2d 389 [1st Dept.1999]. In such cases, the insurer will not be barred from disclaiming coverage “simply as a result of the passage of time,” and its delay in giving notice of disclaimer should be considered under common-law waiver and/or estoppel principles (Travelers, 73 AD3d at 577, 905 N.Y.S.2d 11; see Allstate, 27 NY2d at 269, 317 N.Y.S.2d 309, 265 N.E.2d 736).
(KeySpan Gas E. Corp. v Munich Reins. Am., Inc., 23 NY3d at 590-91 (footnote omitted.) Accordingly, the Court of Appeals remitted the matter to the Appellate Division to determine “whether the evidence supporting this defense” of common-law waiver — by the defendant insurers of their right to disclaim coverage for the insured’s failure to give timely notice — “is sufficient to defeat defendants’ motion for summary judgment based on LILCO[‘s] failure, as a matter of law, to give timely notice under the policies” (id., 23 NY3d at 591). The requisite inquiry, the Court emphasized, is a precise one:
Specifically, the Appellate Division must consider if, under common-law principles, triable issues of fact exist whether defendants clearly manifested an intent to abandon their late-notice defense (see e.g. Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 NY3d 96, 104, 817 N.Y.S.2d 606, 850 N.E.2d 653 [2006]; Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966, 968, 525 N.Y.S.2d 793, 520 N.E.2d 512 [1988]; Albert J. Schiff Assoc. v. Flack, 51 NY2d 692, 698, 435 N.Y.S.2d 972, 417 N.E.2d 84 [1980]; Allstate, 27 NY2d at 269, 317 N.Y.S.2d 309, 265 N.E.2d 736).
(Id., 23 NY3d at 591 (emphasis supplied)).
It is beyond dispute now, as it was when Evanston moved for summary judgment in its favor in 2014, that “Bruckel failed to comply with the condition in the subject policy that required it to ‘immediately’ forward to [Evanston] copies of any legal papers received in connection with [the Sate’s] lawsuit” against it and that although that lawsuit was commenced in March 2012, Evanston “did not receive a copy of the summons and complaint until March 2013” (Evanston Ins. Co. v P.S. Bruckel, Inc., supra, 150 AD3d at 694), when Assistant Attorney General Belford, who, again, had commenced the State’s action against Bruckel, emailed those pleadings to Buchman, the Evanston-retained attorney representing the State in the Staveski action, who, in turn, promptly forwarded the email with the attached pleadings to Dunstan, the Markel claims examiner who was handling the Staveski action for Evanston. Likewise, it is beyond dispute now, as it was in 2014, that Evanston had been told a number of times, beginning as early as April 2, 2012 and again in May, October and November of 2012, that the State was in the process of instituting, or had instituted, an indemnification action against Bruckel in “state court in New York,” that Bruckel had defaulted in that action, and that the State was filing — “based on Buchman’s . . . recommendation” — a notice of default against Bruckel (see, e.g., December 30, 2014 Decision and Order at 5; Evanston Ins. Co. v P.S. Bruckel, Inc., supra, 150 AD3d at 694; “Pre-Trial Report Outline Defense Litigation,” dated April 2, 2012, from Pillinger Miller Tarallo, LLP by Lawrence J. Buchman to Patricia Dunstan, RN, JD, cc: John L. Belford (the “April 2, 2012 pre-trial report”), at pp. 2 and 5, Ex. F to Affirmation of John L. Belford, IV, dated May 22, 2014 (the “Belford 2014 Affirmation”); the Belford 2014 Affirmation, passim; Affidavit of Pat Dunstan, sworn to June 30, 2014, ¶ 6). Although the additional discovery that has been conducted — in particular, the depositions of Belford and Buchman and the production of claims notes prepared by Dunstan and a number of billing entries made by Buchman — add texture to the exchanges among Belford, Buchman and Dunstan and to Bruckel’s passivity in response to the State’s claim against it — most notably, that the categorical statement in Buchman’s April 2, 2012 pre-trial report to Dunstan was qualified in the “Supplemental Pre-Trial Report” he sent to her two days later [FN13] (see “Supplemental Pre-Trial Report,” dated April 4, 2012, [*11]from Pillinger Miller Tarallo, LLP by Lawrence J. Buchman to Patricia Dunstan, RN, JD, copy to John L. Belford (the “April 4, 2012 supplemental pre-trial report”), Ex. E to the deposition of Lawrence Buchman, August 3, 2018 (the “Buchman Dep.”)); that Belford’s failure to provide copies of the State’s pleadings in the State’s action against Bruckel to Dunstan before March 1, 2013, which he conceded he had been asked to do on more than one prior occasion, may not have been inadvertent [FN14] (see Deposition of John Belford, November 5, 2018 (the “Belford Dep.”), tr. at 78-79, 92-93); and that when Buchman reached out to Bruckel — Buchman, at his deposition, did not recall with whom he spoke, whether he had one conversation or two, or the date or dates on [*12]which the conversation or conversations occurred — the explanation he received for Bruckel’s non-responsiveness to the State’s claim was that its business was “not going well, business closing down” and “it’s just a corporation, they’re insulated” (Buchman Dep., tr. at 151)[FN15] – they do not alter the pattern of essential facts that was before the court in 2014, when Justice Asher found that “triable issues of fact remain as to whether Evanston Insurance had notice of the lawsuit” (December 30, 2014 Decision and Order, at 5) and upon which the Appellate Division held that there was a triable issue as to the point in time — “April 2012, or, at the latest, October 2012” (Evanston Ins. Co. v P.S. Bruckel, Inc., supra, 150 AD3d at 694) — at which Evanston had sufficient information for the clock to begin running on its time to disclaim coverage “on the basis, inter alia, of late receipt of the summons and complaint” (id.).
Notwithstanding the relative stasis in the marshaling and presentation of the essential facts — despite the additional discovery that has been conducted — and even though they were successful in defeating Evanston’s earlier showing of prima facie entitlement to summary judgment in its favor by demonstrating that there were issues of material fact concerning the sufficiency and timing of Evanston’s knowledge of the content and posture of the State’s lawsuit against Bruckel and the timeliness of Evanston’s disclaimer of coverage, and although the burden is now on them to show a prima facie entitlement to judgment in their favor based upon those same facts, both the State and Bruckel urge that the action can, nonetheless, now be resolved on the somewhat more fulsome record that now exists. That is, based upon the largely unaltered scenario that led to the denial of Evanston’s earlier motion by Justice Asher and to the affirmance of that denial by the Appellate Division — essentially because it raised, but did not answer, questions concerning the sufficiency of the notice of the Bruckel action that Evanston received, beginning in April 2012, and whether the disclaimer that eventually was uttered on March 15, 2013 was timely — the State and Bruckel contend that there are now no material issues of fact to impede the granting of their summary judgment motion and cross-motion on the ground that [*13]Evanston’s disclaimer is ineffective because it was uttered too late [FN16] .
In contrast to those situations in which an insurer has received no notice of an injury — producing occurrence involving its insured until some appreciable time after the injured person has commenced litigation against the insured, here, as Justice Asher found, “it is undisputed that Evanston Insurance was provided timely notice of the underlying accident involving Henrique Staveski” (December 30, 2014 Decision and Order, at 5), as well as timely notice of Staveski’s and Camargo’s action against the State in the Court of Claims. Ultimately, it defended the State in that action and oversaw and participated in the settlement of the case. As a result, Evanston unquestionably was fully and intimately aware of the circumstances of the underlying occurrence, the extent of Staveski’s injuries and of both the State’s and Bruckel’s exposure. Further, it is indisputable that Evanston was long aware of the State’s desire to pursue recoupment of its uninsured costs from Bruckel and, later, was apprised that the State was asserting that it had commenced an action seeking such relief against Bruckel. Although the State, despite Evanston’s and Buchman’s requests, did not supply Evanston with copies of the pleadings in its action against Bruckel until almost a year after that action had been commenced, and Bruckel never did so, there is nothing to indicate that Evanston, prior to the utterance of the March 15, 2013 disclaimer letter, itself [FN17] made any serious effort to cause Bruckel to provide it with copies of those pleadings or to otherwise cooperate in the defense of the action or the litigation overall.
Effectiveness of Evanston’s Disclaimer.
Assuming that the State and Bruckel are right that the references to the Bruckel action in Buchman’s April 2, 2012 Pre-Trial Report to Dunstan, either independently or along with the various antecedent, contemporaneous, and subsequent communications cited by the parties, including Dunstan’s admitted October 26 and November 29, 2012 conversations with Belford (see June 30, 2014 Dunstan Affidavit, ¶¶ 6-7) constituted sufficient notice to Evanston of the commencement of that action (see Insurance Law 3420(a)(3); December 23, 2014 Order at 5), the mixed legal and factual issues, then, within the context framed by Evanston’s current opposition and the prior holdings in this case, are whether Bruckel’s failure immediately to forward to Evanston the pleadings with which it had been served, as required by the Evanston CGL and excess policies, provided grounds for Evanston’s disclaiming coverage to Bruckel for the State’s action against it; if so, the point in time at which Evanston became aware of those [*14]grounds; and, assuming Evanston’s disclaimer was not issued as soon as it became aware of the grounds for the disclaimer, the point in time past which any delay in issuing the disclaimer became unreasonable, taking into account any satisfactory explanation offered by Evanston for the delay, or — if Evanston is correct in arguing that Insurance Law § 3420(d)(2) is inapplicable to coverage for the State’s claims against Bruckel — whether Evanston, as a result of the amount of time that passed before the disclaimer issued, or otherwise, waived or is estopped from relying on Bruckel’s failure to provide it with the pleadings to disclaim coverage (compare, e.g., Matter of Allcity Ins. Co. [Jimenez], supra, 78 NY2d 1054 [1991], with KeySpan Gas E. Corp. v Munich Reins. Am., Inc., supra, 23 NY3d 583 [2014], and Preserver Ins. Co. v Ryba, supra, 10 NY3d 635 [2008]). As framed in the prior decisions in this case, these are disputed factual issues that the additional discovery conducted following the Second Department’s has not eliminated and which, at least as the record now stands, can only be resolved by the jury.
Even before the Insurance Law was amended in 2008 to add paragraph (5) to § 3420(a), the Court of Appeals had recognized exceptions to strict application of New York’s “no-prejudice rule” (see, e.g.,Sec. Mut. Ins. Co. of New York v Acker-Fitzsimons Corp., 31 NY2d 436, 439 [1972]) where the insurer had received timely notice of the insurance-triggering occurrence and, thus, had a full and prompt opportunity to investigate and to protect its interests, but the insured subsequently failed to comply with a further notice requirement of the insurance policy. Thus, in Matter of Brandon (Nationwide Mut. Ins. Co.), 97 NY2d 491 [2002], the Court of Appeals held that where the insurer had received timely notice of the underlying accident, it could not deny its insured supplementary uninsured/underinsured motorists (“SUM”) benefits for failing to provide it with prompt notice that she had commenced an action against the other driver without showing that it had been prejudiced by the delay:
[U]nlike most notices of claim—which must be submitted promptly after the accident, while an insurer’s investigation has the greatest potential to curb fraud—notices of legal action become due at a moment that cannot be fixed relative to any other key event, such as the injury, the discovery of the tortfeasor’s insurance limits or the resolution of the underlying tort claim.
(97 NY2d at 498). Three years later, in Rekemeyer v State Farm Mut. Auto. Ins. Co., 4 NY3d 468, 472 [2005], the Court of Appeals applied the rationale of Brandon where the SUM claim itself had not been filed “as soon as practicable,” as required by the insured’s policy. In that case, the insured had given her automobile insurer prompt notice of the accident in which she was injured and of her claim for no-fault benefits, but she did not notify the insurer that she was suing the other driver until nearly three months after filing the action and did not inform the insurer that she was making a claim against her own policy for SUM benefits until six months after she learned that the other driver’s coverage was inadequate. The Court acknowledged that the facts of the case before it differed from those in Brandon but held that they nonetheless “also warrant a showing of prejudice by the carrier”:
Here, plaintiff gave timely notice of the accident and made a claim for no-fault benefits soon thereafter. That notice was sufficient to promote the valid policy objective of curbing fraud or collusion. Moreover, the record indicates that State Farm undertook an investigation of the accident. It also required plaintiff to undergo medical exams in December 1998 and February 2000. Under these circumstances, application of a rule that [*15]contravenes general contract principles is not justified. Absent a showing of prejudice, State Farm should not be entitled to a windfall (Brandon, 97 NY2d at 496 n. 3 [743 N.Y.S.2d 53, 769 N.E.2d 810], citing Clementi v. Nationwide Mut. Fire Ins. Co., 16 P.3d 223, 230 [Colo. 2001] ). Additionally, State Farm should bear the burden of establishing prejudice ‘because it has the relevant information about its own claims-handling procedures and because the alternative approach would saddle the policyholder with the task of proving a negative’ (id. at 498 [743 N.Y.S.2d 53, 769 N.E.2d 810]; see also Unigard, 79 NY2d at 584 [584 N.Y.S.2d 290, 594 N.E.2d 571] [placing the burden of showing prejudice on the reinsurer] ). Thus, we hold that where an insured previously gives timely notice of the accident, the carrier must establish that it is prejudiced by a late notice of SUM claim before it may properly disclaim coverage.
(Id., 4 NY3d at 475-76.) Accord In re Liberty Mut. Ins. Co. (Frenkel), 58 AD3d 1089, 1090-91 [3d Dept 2009]; New York Cent. Mut. Fire Ins. Co. v Ward, 38 AD3d 898, 901 [2d Dept 2007]; State Farm Mut. Auto. Ins. Co. v Rinaldi, 27 AD3d 476, 476 [2d Dept 2006]; New York Mut. Underwriters v Kaufman, 257 AD2d 850, 851 [3d Dept 1999].
The Third Department’s decision in New York Mut. Underwriters v Kaufman, supra, is particularly apt. In that case, the insured homeowner, sued in 1996 for an injury that allegedly occurred on his premises in 1994, did not forward the pleadings to his insurer until 2-1/2 months after he was served. The insurer brought a declaratory judgment action against both the homeowner and the personal injury plaintiff and then moved for summary judgment, contending that the insured homeowner’s two-year delay in notifying it of the occurrence and failure promptly to forward to it the pleadings in the personal injury action relieved it of any obligation to defend or indemnify the homeowner. In opposition to the insurer’s motion, both the homeowner and the personal injury plaintiff averred that the homeowner had timely notified the insurer’s agent of the accident and of the eventual tort plaintiff’s injuries more than two years earlier, approximately two weeks after the accident occurred. The trial court denied the motion, and the Appellate Division affirmed, holding that the homeowner’s contention that he had given the insurer timely notice of the occurrence raised a credibility issue to be decided by the trier of fact and that the insurer had failed to show that it was prejudiced by the delay in the forwarding of the pleadings to it:
Plaintiff further urges that Supreme Court erred in denying summary judgment inasmuch as Kaufman failed to promptly forward the summons and complaint as required by plaintiff’s policy of insurance. Plaintiff contends that such failure vitiates the contract without regard to whether plaintiff was prejudiced as a result of the late notice. We disagree. This court previously has held that the principles governing the failure of an insured to give timely notice of an accident are entirely different from those governing the requirement of notice of suit. In the latter case, late notice will be excused where no prejudice has inured to the insurer (see, Aetna Ins. Co. of Hartford, Conn. v. Millard, 25 AD2d 341, 269 N.Y.S.2d 588); see also, Romano v. St. Paul Fire & Mar. Ins. Co., 65 AD2d 941, 410 N.Y.S.2d 942. Inasmuch as O’Neill did not take a default judgment against Kaufman in the underlying personal injury action, no prejudice to plaintiff has been demonstrated (see, id.).
(New York Mut. Underwriters v Kaufman, 257 AD2d 850, 851 [3d Dept 1999]. See also Mark A. [*16]Varrichio and Assoc., Mark A. Varichio v Chicago Ins. Co., 312 F3d 544, 549 [2d Cir 2002], certified question accepted sub nom. Mark A. Varrichio and Assoc. v Chicago Ins. Co., 99 NY2d 545 [2002], and certified question withdrawn sub nom. Mark A. Varrichio and Assoc. v Chicago Ins. Co., 328 F3d 50 [2d Cir 2003], and Mark A. Varrichio and Assoc. v Chicago Ins. Co., 100 NY2d 527 [2003]).
Even if the delay in the forwarding of the pleadings to Evanston is viewed from the perspective of a claimed lack of required cooperation by Bruckel, there are factual issues that cannot be resolved on the current record. As the Appellate Division recently restated in Robinson v Glob. Liberty Ins. Co. of New York, 164 AD3d 1385, 1386 [2d Dept 2018], quoting from its earlier decisions in , respectively, Allstate Ins. Co. v United Intl. Ins. Co., 16 AD3d 605, 606 [2005], and Matter of Government Empls. Ins. Co. v Fletcher, 147 AD3d 940, 941 [2017]:
“To effectively deny coverage based upon lack of cooperation, an insurance carrier must demonstrate (1) that it acted diligently in seeking to bring about the insured’s cooperation, (2) that the efforts employed by the insurer were reasonably calculated to obtain the insured’s cooperation, and (3) that the attitude of the insured, after his or her cooperation was sought, was one of willful and avowed obstruction” (Allstate Ins. Co. v United Intl. Ins. Co., 16 AD3d 605, 606 [2005]; see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169 [1967]; DeLuca v RLI Ins. Co., 153 AD3d 662 [2017]). ” ‘[M]ere efforts by the insurer and mere inaction on the part of the insured, without more, are insufficient to establish non-cooperation’ ” (Matter of Government Empls. Ins. Co. v Fletcher, 147 AD3d 940, 941 [2017], quoting Matter of Country-Wide Ins. Co. v Henderson, 50 AD3d 789, 791 [2008]).
Here, although Buchman testified that he had reached out to Bruckel to inquire whether they had “received the papers, what do they plan to do with the papers, have they informed Evanston or whoever it was, Evanston or Markel or Investors Mutual, whatever they went by, whoever they referred to them by” (Buchman Dep. At 151), he further testified that he was doing so not as an emissary for Evanston, but “to stir the pot,” that is “because I’m trying to get my client, the state, more coverage” (id., at 141, 149; see footnotes 14 and 16, supra). Moreover, although Buchman was confident that he had informed Dunstan of his contact with Bruckel, it appears that neither his files nor Dunstan’s contains any record of his having done so, nor has any party submitted anything on the current motion indicating that Dunstan’s efforts to obtain copies of the pleadings in the State’s action against Bruckel included seeking to obtain them from Bruckel. On the other hand, Bruckel has yet to be deposed in this action, and it is evident that discovery from it is incomplete. Thus, on the current record, issues of fact and the incomplete state of discovery preclude any summary determination that Bruckel’s failure timely to provide copies of the pleadings to Evanston viewed from a lack of cooperation perspective constituted a basis for disclaiming coverage that Evanston relinquished either through waiver or by waiting too long to invoke after learning of the grounds therefor.
For all of the foregoing reasons, the motion of defendant the State of New York, for summary judgment in its favor dismissing the complaint, and the motion of defendant P.S. Bruckel, Inc., incorrectly denominated a cross-motion, for summary judgment in its favor dismissing the complaint and granting its first counterclaim, are denied without prejudice to renewal upon a more complete record if the parties are so advised.
This constitutes the decision and order of the court.
Dated: April 19, 2019
Riverhead, New York
HON. SANFORD NEIL
BERLAND, A.J.S.C.
Footnotes
Footnote 1: The certificate of insurance referenced three policies — a commercial general liability policy (the “CGL policy”), an Excess Liability Policy (the “Excess policy”) and a so-called “Owners and Contractors Protective Liability” policy (the “OCP policy”). Initially, Evanston had “determined” that the State was not an “additional insured” under Bruckel’s CGL policy and was not entitled to coverage for the Staveskis’ claims under any of the policies. After the State commenced the third-party action against it, however, Evanston conducted a “further investigation” and agreed that the State was entitled to coverage under the OCP policy “as the named insured,” but not under the CGL or Excess policies.
Footnote 2: Indeed, except to the extent that Bruckel’s prior and current cross-motions for summary judgment in this action, dated May 22, 2014 and November 8, 2018, respectively, and Bruckel’s opposition to Evanston’s earlier cross-motion for summary judgment may be so construed, it does not appear that Bruckel has ever done so.
Footnote 3: Subsequently, by order dated December 23, 2015, the court (Asher, J.) granted Bruckel’s motion to amend its answer to assert a counterclaim for declaratory relief against Evanston.
Footnote 4: Markel was Evanston’s Claims Service Manager for the Staveski claim (see footnote 8, infra).
Footnote 5: With respect to Evanston’s contention that the claims asserted in the State’s action against Bruckel were subject to exclusions in the Evanston policies and that its cross-motion should have been granted based upon those exclusions, the Appellate Division held that because the court below had not addressed that contention, it “remains pending and undecided.” None of the parties, however, have addressed those exclusions in connection with the current motion and cross-motion.
Footnote 6: Both Buchman — the attorney retained by Evanston to represent the State in the Staveski action — and — Belford — the Assistant Attorney General who represented the State’s interests in that matter and who filed both the earlier impleader action against Evanston and the Bruckel action — have been deposed, but there has been no deposition of Bruckel nor of Evanston, although claim notes and other documents made or maintained by Pat Dunstan, the Markel claims examiner who handled the Staveski claim for Evanston (and whose current medical condition has precludes the parties from taking of her deposition (see fn. 8, infra)), have been produced, albeit in some instances with redactions.
Footnote 7:Because Bruckel is seeking relief against a non-moving party, its cross-motion should more properly have been denominated a “motion.” (See CPLR 2215.) There being no substantial prejudice to the right of any party, the error in denomination will be disregarded for purposes of this decision and the Bruckel’s cross-motion will be treated as if noticed as a motion. (See CPLR 2001.)
Footnote 8: Dunstan, an employee of Markel Services Incorporated and a registered nurse who also holds a law degree, has been diagnosed with Parkinson’s disease. During the relevant time period, Dunstan held the title of Senior Claims Examiner for Markel Services, Inc., the Claims Service Manager for Evanston. As a result of her medical condition, Dunstan has not been deposed in this action. She did, however, execute affidavits on April 2 and June 30, 2014, which are part of the current record.
Footnote 9: Among other things, Bruckel cites the amended “Reservation of Rights Letter,” dated January 7, 2009, that Dunstan, writing for Markel Underwriting Managers, Inc. on behalf of Evanston, addressed to the State of New York, Office of the Attorney General (Exhibit E to the April 2, 2014 Dunstan Affidavit).
Footnote 10: Evanston concedes, and the moving parties do not dispute, that the summons and complaint were first emailed to Evanston on March 1, 2013, when Buchman, the attorney retained by Evanston to defend the State in the Staveski action, forwarded an email that Belford, the Assistant Attorney General who commenced the Bruckel action, had sent to him 21 minutes earlier. Because both emails were sent after business hours on a Friday, Evanston measures begins its day count from the immediately following business day, Monday, March 4, 2013.
Footnote 11: See Long Is. Light. Co. v Allianz Underwriters Ins. Co. – KeySpan Corp. – Am. Re-Ins. Co., 2013 NY Slip Op 80446(U) [1st Dept July 23, 2013].
Footnote 12: The Court of Appeals’ citation to its earlier decision in Preserver Ins. Co. v Ryba, 10 NY3d 635, 642 [2008], is particularly instructive here because it eliminates any doubt that the “underlying claim,” the characterization of which determines the applicability, vel non, of Insurance Law Section § 3420(d)(2), is the claim that has been asserted against, or the alleged liability of, the named insured party for which that insured party is seeking insurance coverage — e.g., breach of contract or common law, statutory or contractual indemnification or contribution — and not any antecedent personal injury or other claim or liability that has been asserted against the party who is seeking judgment against the insured party. (Accord Johnson v Atl. Cas. Ins. Co., 13-CV-1002S, 2015 WL 5021953, at 5 [WDNY Aug. 24, 2015]; New Hampshire Ins. Co. v JVA Indus. Inc., 57 Misc 3d 1209(A), at 3 [Sup Ct, New York Co. 2017]). Indeed, this is consistent with Evanston’s allegations in its complaint in this action, which label the State’s action against Bruckel — but not Staveski’s and Camargo’s action against the State — as “the underlying action” (Complaint, ¶ 5).
Footnote 13: In his April 2, 2012 pre-trial report to Dunstan, with copy to Belford, Buchman recited that he had been “informed by John Belford of the Attorney General’s Office of the State of New York that they have instituted an action against P.S. Bruckel in State Court for indemnification. The Attorney General’s Office plans to expedite the matter against P.S. Bruckel.” In his April 4, 2012 supplemental pre-trial report, however, he was less categorical about the status of the State’s claim against Bruckel, advising, in pertinent part, as follows:
As discussed, according to conversations with John Belford of the Attorney General’s Office, The State of New York is commencing an action against P.S. Bruckel in State Supreme Court for contractual indemnification. We have contacted Mr. Belford and are awaiting confirmation of the commencement of the State Court action as well as a copy of the summons and complaint.
Footnote 15: Buchman testified that he reached out to Bruckel, inquiring whether they had given the carrier notice and if not, “about giving the notice about what’s going on or why aren’t you moving on it” (Buchman Dep., tr. at 151). Their response, as recounted by Buchman in his deposition, was as follows
[T]here was some reference to business not going well, business closing down, something like that, and “they can own my trucks if I have a problem,” something like that because it’s just a corporation and they’re insulated.
That’s why I’m trying to stir the pot. “We got a suit. What are you guys doing about it? Hey, we got this coverage. What’s going on here?”
Footnote 17: Again, Buchman testified that he reached out to Bruckel on one or more occasions, in his capacity as defense counsel for the State in the Staveski action and with the goal of increasing the resources — specifically, insurance coverage – available to settle that action (see fn. 15, supra). Although apparently not reflected in any of the writings that are part of the current record, Buchman testified that he was “sure” that he had talked with Dunstan about his contacting Bruckel, that she was aware that he was doing so and that he informed her of the conversation in which he referenced “coverage” (Buchman Dep. at 140, 142; see fn. 15, supra).
Reported in New York Official Reports at Allstate Ins. Co. v Fiduciary Ins. Co. of Am. (2014 NY Slip Op 51021(U))
Allstate
Insurance Company, by its authorized agent SECOND LOOK, INC., Petitioner,
against Fiduciary Insurance Company of America, Respondent. |
13-12430
DANIEL WILLIAM DeLUCA, ESQ.
Attorney for Petitioner
3555 Veterans Memorial Hwy
Ronkonkoma, New York 11779
D’AMATO & LYNCH, LLP
Attorney for Respondent
Two World Financial Center
New York, New York 10281
Andrew G. Tarantino Jr., J.
In this Article 75 proceeding, the petitioner Allstate Insurance Company, by its agent Second Look, Inc. (Allstate), seeks a judgment confirming an arbitration award dated October 19, 2012, in the amount of $14,966.02 for a loss transfer claim arising out of a motor vehicle accident that occurred on April 19, 2008. The respondent Fiduciary Insurance Company of America (Fiduciary) has filed a cross petition which seeks a judgment vacating said arbitration award.
The subject accident allegedly occurred when a vehicle owned by Fiduciary’s insured came into contact with a vehicle owned and operated by Allstate’s insured, in which Noshaba Arooj (Arooj) was a passenger. After paying no-fault benefits to Arooj, Allstate filed demands for arbitration seeking to recoup the amount paid for medical treatments for injuries allegedly sustained as a result of the accident. Under the circumstances herein, the rights and obligations of insurers are subject to mandatory arbitration (Insurance Law §§ 5105 and 5221 [b]). It is undisputed that, as a result of Allstate’s initial filing, a prior arbitration award dated March 22, 2010 (Prior Decision) found Allstate’s driver and Fiduciary’s driver each 50% liable for the accident.
Thereafter, Allstate filed a demand for arbitration regarding additional no-fault benefits paid to Arooj. In a decision dated October 19, 2012 the arbitrator awarded Allstate 50% of the amount paid out on Arooj’s behalf based, at least in part, on the finding of liability in the Prior Decision. Allstate indicates that Fiduciary failed to pay the initial arbitration award until a prior petition to confirm was granted, and that this is the second petition against Fiduciary arising out of the same accident.
In its petition, Allstate alleges that the vehicle owned and operated by Fiduciary’s insured was a vehicle for hire which enables Allstate to make a qualified claim for loss transfer, that, pursuant to the rules of Arbitration Forum Inc. (AFI) and the relevant regulations, Fiduciary was required to pay the instant arbitration award within 30 days, and that Fiduciary has failed to pay said award. Allstate further alleges that Fiduciary failed to move to vacate the arbitration award within 90 days pursuant to CPLR 7511, that it is entitled to recover its legal fees on the grounds that Fiduciary has no valid defense or reason for non-payment of the arbitration award, that Fiduciary’s actions are frivolous, and that it is entitled to interest from the date of the arbitration award as well as court costs.
In support of its petition to confirm the subject arbitration award, Allstate submits the decision dated October 19, 2012, a number of prior orders of the court in unrelated proceedings, two pages from the E-Courts website, and an affirmation from its attorney regarding its claim for legal fees. In addition, Allstate submits a copy of a letter, dated April 1, 2011 on Allstate letterhead, which states that Second Look, Inc. “is the duly appointed agent for Allstate Insurance Company to process and collect subrogation claims . . . [and] is authorized to take any administrative/legal actions needed to pursue” such claims.
In her decision dated October 19, 2012, the arbitrator notes that there has been a prior [*2]arbitration award, and “[Allstate] has filed for supplemental amounts. [Fiduciary] in their contentions has challenged liability … [and] contends that they have evidence where [Allstate] has admitted their insured was at fault in the loss … [Fiduciary]’s representative … was advised that the [Prior Decision] is final and binding and … liability … is no longer an issue.” Thus, the arbitrator found that Allstate “proved 50% liability against [Fiduciary]. In the paragraph labeled “Damages Decision,” the arbitrator sets forth the following:
[Allstate] submitted proof of damages as required by [AFI] rules and regulations. [Fiduciary] claims that they did not receive paperwork from [Allstate] to substantiate the amounts claimed, [Fiduciary] made several arguments in regards to the injuries claimed by the injured party but was unable to prove that the payments made were unrelated or excessive. Since [Fiduciary] claims they never received the proof of payment from [Allstate] there is no way they can prove the treatment rendered was unrelated or excessive.
In opposition, Fiduciary submits its cross petition which seeks judgment vacating and setting aside the arbitration award on the ground that the decision was irrational, arbitrary and capricious, and exceeded the arbitrator’s power in that she failed to consider new evidence which proved that Allstate’s driver was 100% liable for the accident, to consider Fiduciary’s evidence as to damages, and to allow a court reporter to record the arbitration hearing in violation of Fiduciary’s due process rights. The Court will address Fiduciary’s cross petition before it reviews Allstate’s petition as it directly opposes the relief sought in the petition, and this may well determine the issues before the Court.
CPLR 7511 (b) (1) sets forth the exclusive grounds for vacating an award where, as here, the aggrieved party participated in the arbitration including, but not limited to, corruption, fraud or misconduct in procuring the award, partiality of an arbitrator appointed as a neutral, or the arbitrator making the award exceeded her power. However, compulsory arbitration awards are subject to closer judicial review than awards resulting from consensual arbitration, “as claimants are denied access to the courts in the first instance” (Rose v Travelers Ins. Co., 96 AD2d 551, 551, 465 NYS2d 64 [2d Dept 1983]; see Matter of Motor Vehicle Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 652 NYS2d 584 [1996]; Matter of Progressive Cas. Ins. Co. v New York State Ins. Fund, 47 AD3d 633, 850 NYS2d 478 [2d Dept 2008]). Here, it undisputed that the controversy between the parties is subject to compulsory arbitration, and that the arbitration process remains Allstate’s sole remedy to recover herein (CPLR 5105 [b]).
It is well settled that an arbitration award in a compulsory arbitration proceeding must be in accord with due process and supported by adequate evidence in the record (see City School Dist. of the City of NY v McGraham, 17 NY3d 917, 934 NYS2d 768 [2011]; Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., supra; Motor Veh. Mfrs. Assn. of U.S. v State of New York, 75 NY2d 175, 551 NYS2d 470 [1990]; Matter of Petrofsky [Allstate Ins. [*3]Co.], 54 NY2d 207, 445 NYS2d 77 [1981]; Matter of Mangano v United States Fire Ins. Co., 55 AD3d 916, 866 NYS2d 348 [2d Dept 2008]). The award also must be rational and satisfy the arbitrary and capricious standard of CPLR Article 78 (Motor Veh. Mfrs. Assn. of U.S. v State of New York, supra; Caso v Coffey, 41 NY2d 153, 391 NYS2d 88 [1976]; Lackow v Department of Educ. (or “Board”) of City of NY, 51 AD3d 563, 859 NYS2d 52 [1st Dept 2008]). An arbitration award may be found to be rational if any basis for the determination is apparent to the court upon reading the evidentiary record before the arbitrator (see Caso v Coffey, supra; Matter of Travelers Indem. Co. v United Diagnostic Imaging, 70 AD3d 1043, 893 NYS2d 899 [2d Dept 2010]; Matter of State Farm Mut. Auto. Ins. Co. v City of Yonkers, 21 AD3d 1110, 801 NYS2d 624 [2d Dept 2005]; see generally Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 356 NYS2d 833 [1974]). In addition, the burden of establishing the invalidity of an arbitration award is on the party challenging it (Caso v Coffey, supra; Lackow v Department of Educ. (or “Board”) of City of NY, supra).Here, Fiduciary contends that the subject decision is irrational because the arbitrator “improperly applied the liability finding in the Prior Decision,” and failed to consider newly discovered evidence that Allstate’s driver was 100% liable for the accident. Fiduciary further contends that, in its investigation in connection with the subject filing for arbitration, it obtained a copy of an ISO Report in which Allstate noted “Insured. Was Speeding Doing 80 MPH. Went Through R,” and that said report is “conclusive proof” that Allstate knew that its insured driver was 100% liable for this accident. Fiduciary alleges that ISO is a “shared comprehensive database where insurers report, among other things, the results of their claims and fraud investigations,” and that said report was not entered into ISO until well after the Prior Decision.
A review of the record reveals that Fiduciary has failed to submit a copy of the police accident report regarding the subject accident in support of its cross petition, that the arbitrators in the Prior Decision and the subject decision considered the police report, and that the arbitrator in the Prior Decision noted that Allstate was “able to prove through the police report that Fiduciary is half at fault for this loss.” Under the heading “What evidence caused you to render this decision and why?” the arbitrator in the Prior Decision stated “based on the police report, [Fiduciary’s driver] was cited for traffic control disregarded.” Under these circumstances, there was a rational basis for the arbitrator’s determination in the second arbitration that the Fiduciary vehicle was 50% liable for the accident (see Matter of Mangano v United States Fire Ins. Co., supra).
Fiduciary’s allegation that the arbitrator did not consider the ISO report, even if true, does not change the result. On review, an award may be found to be rational if any basis for such a conclusion is apparent to the court based upon a reading of the record (see Matter of Travelers Indem. Co. v United Diagnostic Imaging, supra; Matter of State Farm Mut. Auto Ins. Co v City of Yonkers, supra). In any event, Allstate contends that the ISO report is not its final conclusion in its claim and fraud investigation, and that the notation therein is merely the memorialization of the initial statement made by Fiduciary’s driver to Allstate’s examiner. Here, [*4]it is determined that there is sufficient basis for the arbitrator to consider the Prior Decision, which is based on the subject police report, to be convincing evidence regarding the relative culpability of the parties. This is especially true where the record reveals that both parties submitted said police report to the arbitrator in the hearing which is the subject of this proceeding, and Fiduciary does not challenge its probative value.
Fiduciary further contends that the arbitrator “did not hold Allstate to its burden of proof, but inappropriately shifted the burden to Fiduciary to disprove the damages.” As noted above, the arbitrator held that, because Fiduciary claimed that it never received proof of payment from Allstate it could not prove that the treatment rendered to Arooj was unrelated or excessive. It is undisputed that the only evidence submitted by Allstate regarding its damages, and the only evidence considered by the arbitrator in rendering her decision, was Allstate’s payment ledger. Under the heading “What evidence caused you to render this decision and why?” the arbitrator stated “Decision based on … proof of payment submitted,” and the record indicates that the sole item in support of Allstate’s claim for damages was its “payment history.”
Fiduciary asserts that pursuant to AFI’s rules, where a respondent disputes a damages claim, a payment ledger is insufficient to establish damages. In support of this assertion, Fiduciary submits a copy of the “Summary of May 11, 2011 Loss Transfer Advisory Committee Meeting”[FN1] wherein it is stated that
Per the rules, a payment ledger is sufficient as “minimal” proof of damages should the Respondent not dispute damages. If the Respondent does dispute damages, then additional evidence may be needed to support the amount claimed/sought. In addition, if specific damages are disputed and the arbitrator believes the Respondent’s argument is valid, the arbitrator may adjourn the hearing to require the Applicant to provide the Respondent with a copy of their proofs, specific to the damages disputed.
In addition, Fiduciary contends that AFI arbitrators “are required to look to additional proofs of damages where damages have been disputed by a Respondent as to the reasonableness and necessity of the damages sought by the Applicant.” In support of this contention, Fiduciary submits a copy of AFI’s “Guide For Arbitrators,”[FN2] wherein it is stated that
If a responding company raises a damages argument in the Disputed Damages section that could be valid, you should review the filing company’s proofs for damages to respond to the challenge. The responding company must provide a valid reason for its challenge — causation, pre-existing damages, reasonable and necessary, ACV versus RCV, etc., and not simply indicate “we challenge all damages.” However, if it provides a valid rationale for the challenge, it should be considered even if the responding company isn’t given the opportunity to itemize it.
It is undisputed that Fiduciary submitted documents which raise the question whether Arooj was truthful regarding her injuries and the need for treatment. More importantly, the arbitrator herself indicates that Fiduciary claimed that it had not received the “paperwork from [Allstate] to substantiate the amounts claimed.” AFI’s “Guide For Arbitrators” addresses this issue as follows: “It must be noted that the responding company is at the mercy of the filing company when it is challenging damages. If the filing company has not provided the responding company with full documentation of the damages it is claiming for recovery, it will be difficult, if not impossible, to itemize exceptions to what it has never seen.”
Here, upon reading the evidentiary record before the arbitrator, it is not apparent to the Court that there is any rational basis for the determination that Fiduciary bore the burden for the alleged failure of Allstate to provide full documentation to Fiduciary regarding its damages, or that an adjournment of the hearing was not warranted. Therefore, that portion of the award was irrational as well as arbitrary and capricious (see Caso v Coffey, supra; Matter of Travelers Indemnity Co. v United Diagnostic Imaging, supra; Matter of State Farm Mut. Auto. Ins. Co. v City of Yonkers, supra). Under these circumstances, the matter is remitted to the arbitrator for a new determination as to the amount of damages recoverable by Allstate herein (see CPLR 7511 [d]).
Finally, Fiduciary contends that its due process rights were violated when the arbitrator refused its request to allow a court reporter to record the subject hearing. Fiduciary fails to cite any authority for its position, and relies instead on conclusory statements in its verified cross petition and an affidavit submitted in support thereof that, because this is a mandatory arbitration process, it was a denial of due process to refuse its request. The only regulation touching on the subject appears in 11 NYCRR § 65-4.5, entitled “No-fault arbitration forum procedure,” which provides in pertinent part in sub-paragraph (l): “Record of proceedings. A stenographic record of the arbitration proceedings shall not be required. However, a party requesting such a record shall inform the other party or parties of such intent, make the necessary arrangements, and pay the cost thereof directly to the person or agency making such record.”
It is undisputed that AFI’s rules do not permit a party to require that a court reporter be present at a hearing. Generally, courts avoid interfering in the arbitral process, and they afford arbitrators wide discretion in procedural matters, which will not be limited absent a compelling [*5]reason (see Matter of Glen Rauch Sec. v Weinraub, 2 AD3d 301, 768 NYS2d 611 [1st Dept 2003]; Matter of Travelers Ins. Co. v Job, 239 AD2d 289, 658 NYS2d 585 [1st Dept 1997]; Avon Prods. v Solow, 150 AD2d 236, 541 NYS2d 406 [1st Dept 1989]). The sworn statement of Fiduciary’s affiant that court reporters have been permitted in other hearings, does not establish that the arbitrator’s denial of the request herein was irrational or violative of Fiduciary’s due process rights. Here, Fiduciary has not established that it informed Allstate of its intent to schedule a court reporter, and made the necessary arrangements pursuant to the subject regulation. More importantly, Fiduciary has not established that arbitration hearings in general, and the subject hearing in particular, cannot be conducted in a fair and rational manner without the aid of a court reporter. In light of the subject regulation, and the absence of an AFI rule permitting a party to require the presence of a court reporter, the determination whether a court reporter is needed generally rests with the arbitrator.
A review of the entire record does not alter the determinations herein. In its petition, Allstate alleges that Fiduciary failed to move to vacate the arbitration award within 90 days pursuant to CPLR 7511, that it is entitled to recover its legal fees on the ground that Fiduciary has no valid defense or reason for non-payment of the arbitration award, and that it is entitled to interest from the date of the arbitration award as well as court costs. Allstate’s first allegation, in which it implies that Fiduciary is not permitted to contest the petition, is without merit. A party may oppose an arbitration award either by motion pursuant to CPLR 7511 (a) to vacate or modify the award within 90 days after delivery of the award or, as here, by objecting to the award on the grounds set forth in CPLR 7511 (b) upon an application to confirm the award notwithstanding the expiration of the 90-day period (see Matter of Brentnall v Nationwide Mut. Ins. Co., 194 AD2d 537, 598 NYS2d 315 [2d Dept 1993]; Karlan Constr. Co. v Burdick Assoc. Owners Corp., 166 AD2d 416, 560 NYS2d 480 [2d Dept 1990]; State Farm Mut. Auto. Ins. Co. v Fireman’s Fund Ins. Co., 121 AD2d 529, 504 NYS2d 24 [2d Dept 1986]). That branch of Allstate’s petition which seeks to recover its attorney’s fees on the ground that Fiduciary’s failure to pay the arbitration award amounts to frivolous conduct is denied. The Court finds that Fiduciary’s failure to pay the subject arbitration award, and its cross petition, are based, in part, upon a potentially valid legal argument, and considering that the cross petition has been granted in part, clearly did not rise to the level of “frivolous conduct” as contemplated by court rules (see CPLR 8303-a; Uniform Rules for Trial Cts [22 NYCRR] § 130-1.1 [a]; S & B Petroleum, Inc. v Gizem Realty Corp., 8 AD3d 550, 778 NYS2d 696 [2d Dept 2004]; Agostini v Sobol, 304 AD2d 395, 757 NYS2d 555 [1st Dept 2003]; Juron & Minzner v State Farm Ins. Co.,303 AD2d 463, 756 NYS2d 428 [2d Dept 2003]; Matter of Christopher, 280 AD2d 546, 720 NYS2d 391 [2d Dept 2001]). Lastly, it is determined that Allstate’s request for interest and court courts must be held in abeyance until a decision is rendered in accordance with this decision.
If an application to vacate an award is denied, the Court must confirm the award (CPLR 7511 [e]). Accordingly, the petition is granted to the extent that the determination of liability in the subject award is confirmed and is otherwise denied. Concomitantly, that branch of the cross motion which seeks judgment vacating the award of damages in the subject arbitration award is granted, and the matter is remitted to the arbitrator, or a substitute, for a determination of [*6]damages in accordance with this decision.
Settle judgment.
__________________________________
Andrew G. Tarantino, Jr.
A.J.S.C.
Footnotes
Footnote 1:Pursuant to 11 NYCRR § 65-4.11(f) governing mandatory arbitration for insurers, a loss transfer advisory committee is charged with regularly reviewing the rules and all other relevant matters involving settlements between insurers and reporting its findings and recommendations to the superintendent of insurance.
Footnote 2:The document submitted includes the notation “Updated: June 27, 2013,” which is subsequent to the subject decision dated October 19, 2012. However, there is no indication in the document that the quoted material has been updated, and Allstate does not contend that the content is inapplicable herein.
Reported in New York Official Reports at One Beacon Ins. Group, LLC v Halima (2008 NY Slip Op 52715(U))
| One Beacon Ins. Group, LLC v Halima |
| 2008 NY Slip Op 52715(U) [29 Misc 3d 1211(A)] |
| Decided on July 15, 2008 |
| Supreme Court, Suffolk County |
| Cohalan, J. |
| 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, Suffolk County
One Beacon Insurance
Group, LLC, any and all of its subsidiaries and affiliates, including, but not limited to,
AUTOONE INSURANCE COMPANY and GENERAL ASSURANCE COMPANY, Plaintiff,
Halima, Defendants
against Ahmed Erfan Halima, M.D., DIAGNOSTIC MEDICAL TESTING, P.C., TRIBECA MEDICAL, P.C., ADVANCED MEDICAL SERVICES, P.C., MULTI-MEDICAL SERVICES, P.C., MONTGOMERY MEDICAL, P.C., SOUTH BRONX MEDICAL & WELLNESS, P.C., SOUTHERN MEDICAL, P.C., GEORGETOWN MEDICAL SERVICES, P.C., AHMED HALIMA, M.D., P.C., NEW MILLENNIUM COMPREHENSIVE MEDICAL HEALTH, P.C.,GUY DITOMMASO, GUILIO CARUSO, JOSEPH BROGNA, NESTOR NICLAIDES, MARK SLAMOWITZ, LEO KHATIEV, MOHAMED BEDOWI, KIRILL “KEN” PERCY, VADMIM SUIRKOV, M.D., JEROME GREENBERG, NORTHEAST MEDICAL BILLING, STARMED MANAGEMENT, INC., Minick Defendants MICHAEL SCOTT MINICK, D.C., COMPLETE MEDICAL REHAB. P.C., ANM MANAGEMENT COMPANY, INC., ANM TRANSPORT CO., CJ TRANSPORT CO., SCOTT FUNDING COMPANY, INC., MICHELLE MINICK, METRO CHIRO and REHAB, PLLC, GREENTREE MEDICAL SERVICES, P.C., BAKSHI JATINDER SINGH, M.D., RICHARDO GALDAMEZ, M.D., Glassman Defendants BERNIE GLASSMAN a/k/a BERNARD GLASSMAN, G.B. ASSOCIATES, INC., Defendants. |
06505-07
PLTF’S/PET’S ATTORNEY:
Brody, O’Connor & O’Connor
111 John Street, Suite 900
New York, New York 10038
Bruce S. Rosenberg, Esq.
2631 Merrick Road, Suite 401
Bellmore, New York 11710
Einsnberg & Carton
2631 Merrick Road, Suite 201
Bellmore, New York 11710
Meiselman, Denlea, Packman, Et Al.
1311 Mamaroneck Avenue
White Plains, New York 10605
Neil L. Fuhrer & Associates, LLP
750 Third Avenue
New York, New York 10017
Kenneth B. Schwartz, Esq.
555 Westbury Avenue
Carle Place, New York 11514
Conroy & Associates
350 Old Country Road, Suite 106
Garden City, NY 11530
Wylie M. Stecklow
10 Spring Street, Suite 1
New York, New York 10012
DEFT’S/RESP ATTORNEY:
Bruno, Gerbino & Soriano, LLP
James K. Hogan, Esq.
445 Broad Hollow Road, suite 220
Melville, New York 11714
Peter Fox Cohalan, J.
It is, ORDERED that these motions by plaintiff for injunctive relief (seq. #
001), and by defendants for dismissal (seq. #
002 & 004), and a change of venue (seq.#
003) are hereby decided as follows.
The plaintiff instituted this action against the various named defendants listed as the Halima et al. defendants, the Minick defendants and the Glassman defendants [*2]alleging that all the various defendants and entities have engaged in a systematic scheme to defraud the plaintiff insurance company by submitting bills for reimbursement of no-fault related services allegedly rendered to individuals involved in automobile accidents. The plaintiff contends that the named individual defendants who are physicians sold their names and allowed the use of their medical licenses to form the related professional corporations also named as defendants for the sole basis of obtaining benefits from the plaintiff, among others. The plaintiff contends that the professional medical corporations were actually created and owned by laypersons, chiropractors and a now disbarred attorney. The plaintiff claims that it is currently litigating claims by these defendants in excess of $456,682.11 and points to a New York Court of Appeals decision in State Farm Insurance v. Mallela, 4 NY3d 313, 794 NYS2d 700 (2005) for the proposition that a fraudulently incorporated professional corporation is not entitled to recover benefits under the New York no-fault law where the corporation is not actually owned by the required medically licensed physician. This lawsuit thereafter ensued. The Halima et al., defendants have defaulted except for defendant Mark Slamowitz who has interposed an answer and filed opposition to the plaintiff’s requested relief and has sought by way of motion a change of venue from Suffolk County, New York to Kings County, New York pursuant to CPLR §510.
The plaintiff now moves for injunctive relief (seq. #
001) seeking to stay all current and future no-fault proceedings against the defendants as well as payments pending resolution of the instant litigation and the answering defendants oppose the requested relief. The Minick defendants, Michele Minick and her designated companies, ANN Management Company Inc., ANM Transport Co., CJ Transport Co., and Scott Funding Company, Inc., (seq. #
002) [hereinafter Michelle Minick et al.] and Michael Scott Minick and his designated companies, Montgomery Medical P.C. and Metro Chiro and Rehab, PLLC., (seq. #
004) [hereinafter Michael Minick et al.] move to dismiss the 1st, 2nd, 3rd, 4th, 5th and 6th causes of action (Michael Scott Minick et al., seq. #
004) and the 3rd, 4th and 5th causes of action (Michele Minick et al., seq. #
002) for failure to state a cause of action. The plaintiff opposes this requested relief. The defendant, Mark Slamowitz, also moves for a change of venue of this action from Suffolk County, New York to Kings County, New York pursuant to CPLR 510(1), 511(b) or 510(3) on the grounds that the plaintiff’s choice of forum is improper which relief the plaintiff opposes.
The purpose of a preliminary injunction is to preserve the status quo pending trial. McLaughlin, Piven, Vogel Inc. v. W. J. Nolan & Co., Inc., 114 AD2d 165, 498 NYS2d 146 (2nd Dept. 1987), appeal denied 67 NYS2d 606, 501 NYS2d 1024. In order to prevail on a motion for a preliminary injunction, the moving party has the burden of establishing, (1) a likelihood of ultimate success on the merits, (2) irreparable injury absent a granting of the requested relief and (3) the equities weigh in its favor. Related Properties, Inc., v. Town Bd of Harrison, 22 AD3d 587, 802 NYS2d 221 (2nd Dept. 2005); Upgrade Education Services, Inc. v. Rappaport, 136 AD2d 628, [*3]523 NYS2d 872 (2nd Dept. 1988); Benjamin Kurzban and Son, Inc. v. Board of Education, City of New York, 129 AD2d 756, 514 NYS2d 749 (2nd Dept. 1987). Preliminary Injunctive relief lies with the sound discretion of the Court [Geres v Koch, 62 NY2d 84, 476 NYS2d 73 (1984)] and it is predicated on a clear showing of the afore-mentioned three prong test. Ginsberg v. Ock-A-Bock Community Ass’n, Inc., 34 AD3d 637, 825 NYS2d 119 (2nd Dept. 2006); W. T. Grant Co., v Srogi, 52 NY2d 496, 438 NYS2d 761 (1981); cf. Albini v. Solork Associates, 37 AD2d 835, 326 NYS2d 150 (2nd Dept. 1971).
As a provisional remedy, the chief function of a preliminary injunction is to prevent any conduct before judgment which would impair the ability of the Court to render the appropriate final judgment. Mucchi v. Eli Haddad Corp., 101 AD2d 724, 475 NYS2d 35 (1st Dept. 1984). However, it is also well settled that, absent extraordinary circumstances, a preliminary injunction will not be granted if it provides the ultimate relief that the movant would gain via a final judgment. SHS Baisley, LLC. v Res Land, Inc., 18 AD3d 727, 795 NYS2d 690 (2nd Dept. 2005). Here, in the case at bar, the plaintiff provides an affidavit from a cooperating named defendant, Ahmed Erfan Halima, M.D. (hereinafter “Halima”), setting forth the very fraudulent acts discussed in the complaint wherein physicians were lending their names for a fee to laypersons, chiropractors and an attorney so as to fraudulently incorporate no-fault clinics actually owned and controlled by these non-licensed non medical professionals. The plaintiff has established a likelihood of success, irreparable injury and equities which favor its case. The defendants suggest that the plaintiff is not entitled to injunctive relief because money damages would compensate the plaintiff for any wrongdoing; however, if the fraudulent corporation owned or controlled by a non-licensed medical professional goes out of business or disappears, the plaintiff is indeed irreparably harmed as is the public because monies would have been diverted to those in control of the fraudulent corporation without any recourse by the plaintiff.
The plaintiff has established irreparable harm, likelihood of ultimate success on the merits and that the balancing of the equities lies in their favor. Trimboli v. Irwin, 18 AD3d 866, 796 NYS2d 659 (2nd Dept. 2005). However, because preliminary injunctive relief is an equitable remedy, the award of such relief is not only discretionary with this Court, but may be tailored to protect the interests of all the parties. See, Paddock Construction LTD. v. Automated Swim Pools, Inc., 130 AD2d 894, 515 NYS2d 662 (3rd Dept. 1987); Antinelli v. Toner, 74 AD2d 996, 427 NYS2d 99 (4th Dept. 1980) appeal after remand, 78 AD2d 576, 432 NYS2d 421. Therefore, as to the defaulting defendants named, injunctive relief is granted without opposition; as to those defendants appearing in this action, the injunctive relief sought is granted unless these defendants present and file with the plaintiff, the corporate documents establishing a licensed medical professional is the owner, operator and in principal control of the corporation seeking reimbursement of no-fault benefits provided. A failure to so provide the corporate documents, resolutions and identity of the officers of the corporation seeking benefit payments will continue the injunction as to all defendants failing to [*4]provide such proof. The defendants are directed to provide to the Court copies of all documents identifying the principals in control of the various entities seeking payment for benefits provided under the no-fault provisions. The defendants are granted leave to renew their objections to injunctive relief if they have been unfairly denied reimbursement after having provided the documentation and proof required by this order. See, CPLR §6314. The plaintiff is directed to file an undertaking in the amount of $100,000.00 pursuant to CPLR §6312 (b).
The Minick defendants also move pursuant to CPLR §3211 (a) (7) for dismissal of the causes of action contained within the plaintiff’s complaint ( seq. #
002 & #
004) on the grounds that the causes of action identified in the movant’s papers fail to state a cause of action.
Upon a motion to dismiss a complaint for legal insufficiency, the test to be applied is whether the complaint gives sufficient notice of the transactions, occurrences or series of transactions or occurrences intended to be proven and whether the requisite elements of any cause of action know to our law can be discerned from its averments. Frank v. DaimlerChrysler Corp., 292 AD2d 118, 741 NYS2d 9 (1st Dept. 2002); Gruen v. County of Suffolk, 187 AD2d 560, 590 NYS2d 217 (2nd Dept. 1992); Moore v. Johnson, 147 AD2d 621, 538 NYS2d 28 (2nd Dept. 1989); Conroy v. Cadillac Fairview Shopping Center Properties, 143 AD2d 726, 533 NYS2d 446 (2nd Dept. 1988). Furthermore, the complaint should be liberally construed in plaintiff’s favor and the facts alleged in the complaint should be assumed to be true. P.T. Bank Central Asai v. ABN Amro Bank N.V., 301 AD2d 373, 754 NYS2d 245 (1st Dept. 2003); Palazzolo v. Herrick, Feinstein, LLP, 298 AD2d 372, 751 NYS2d 401 (2nd Dept. 2002); Holly v. Pennysaver Corp., 98 AD2d 570, 471 NYS2d 611 (2nd Dept. 1984). The nature of the inquiry is whether a cause of action exists and not whether it has been properly stated. McGill v. Parker, 179 AD2d 98, 582 NYS2d 91 (1st Dept. 1992); Marini v. D’Atolito, 162 AD2d 391, 557 NYS2d 45 (1st Dept. 1990).
As noted by the Court in Pace v. Perk, 81 AD2d 444, 440 NYS2d 710 (2nd Dept. 1981) with regard to a motion to dismiss pursuant to CPLR 3211
” Upon such a motion to dismiss a complaint for legal insufficiency, the court must assume that the allegations are true (Denihan Enterprises v. O’Dwyer, 302 NY 451, 458, 99 NE2d 235), and must deem the complaint to allege whatever can be imputed from its statements by fair and reasonable intendment, however imperfectly, informally or illogically facts may be stated therein (Condon v. Associated Hosp. Service of New York, 287 NY 411, 40 NE2d 230). In making its analysis, the court is not bound by the constructions and theories of the parties (see, Siegel, Practice Commentaries, McKinney’s Cons. Laws of NY, Book 7B, CPLR 3211:24). The test of the sufficiency of a complaint is whether it gives sufficient notice of the transactions, occurrences, or series of transactions or occurrences intended to be proved and [*5]whether the requisite elements of any cause of action know to our law can be discerned from its averments (CPLR 3013; Foley v. D’Agostino, 21 AD2d 60, 62-65, 248 NYS2d 121; Guggenheimer v. Ginzberg, 43 NY2d 268, 274-275, 401 NYS2d 182, 372 NE2d 17). Where the motion to dismiss for failure to state a cause of action is made under CPLR 3211, the plaintiff may rest upon the matter asserted within the four corners of the complaint and need not make an evidentiary showing by submitting affidavits in support of his complaint (Rovello v. Orofino Realty Co., 40 NY2d 633, 389 NYS2d 314, 357 NE2d 970).”
The rules governing the Court’s review of a motion to dismiss pursuant to CPLR 3211 (a)(7) are both simple and straight forward. The Court must afford the complaint a liberal construction, accept as true the allegations contained therein, afford plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory. Guggenheimer v. Ginzburg, 43 NY2d 268, 401 NYS2d 182 (1978); One Acre Inc. V. Town of Hempstead, 215 AD2d 359, 626 NYS2d 226 (2nd Dept. 1995). Although, as the Court noted, the plaintiff need not make an evidentiary showing by submitting affidavits or other documentation in support of the complaint, nevertheless, if submitted by the plaintiff, they “may be used freely to preserve inartfully pleaded, but potentially meritorious claims” (Rovello v. Orofino Realty Co., supra , 635, 389 NYS2d 314, 316).
With these general principles in mind, the Court, upon review of the plaintiff’s complaint, submissions, affidavits and the allegations contained in it, finds that for the reasons stated herein the motions by the Minick defendants for dismissal of the plaintiff’s complaint pursuant to CPLR §3211 (a)(7) for failure to state a cause of action (seq. #
002-Michelle Minick and #
004-Michael Scott Minick) are in all respects denied.
The Court when assessing the motion pursuant to CPLR §3211 (a)(7) may freely consider the plaintiff’s affidavit to remedy any defects which may be apparent in the complaint. The criterion is not whether the proponent has pleaded a cause of action but whether, in fact, the proponent has one and affidavits and other evidence may be considered. Fay Estates v. Toys “r” Us, Inc., 22 AD3d 712 (2nd Dept. 2005); Pechko v. Gendelman, 20 AD3d 404 (2nd Dept. 2005).
As the Court in Scott v. Cooper, 215 AD2d 368, 625 NYS2d 661 (2nd Dept. 1995) app. Dis. 86 NY2d 812, 632 NYS2d 497, aptly noted:
” The criterion is whether the plaintiff has a cause of action and not whether he may ultimately be successful on the merits (see, Stukuls v. State of New York, 42 NY2d 272, 275; Detmer v. Acampora, 207 AD2d 475; Greenview Trading Co. V. Hershman & Leicher, 108 AD2d 468, 470).” [*6]
The motions by the defendants for dismissal of the plaintiff’s complaint pursuant to CPLR §3211 (a)(7) is set forth in each of the two (2) individual motions by the defendants.
The motion by defendant, Michelle Minick, et al. (Seq. #
002), seeks to dismiss the third (3rd) cause of action sounding in fraud, the fourth (4th) cause of action seeking punitive damages and the fifth (5th) cause of action sounding in unjust enrichment/restitution. The defendant Michelle Minick et al’s motion is denied as to cause of action three (3rd) sounding in fraud and five (5th) sounding in unjust enrichment. CPLR §3016 requires an action sounding in fraud to be pled with particularity and to set forth sufficient detail to clearly inform the defendant with respect to the incidents complained of. The plaintiff has set forth in detail that the named defendants and the corporations controlled by them are but shell corporations in the name of licensed medical physicians but are actually owned and controlled by non- licensed non-medical individuals, such as Michael Scott Minick, a chiropractor, using the “dummy” corporations to bill the no-fault carrier for services allegedly not performed or performed contrary to law. The plaintiff provides an affidavit from Halima, a defaulting defendant and a cooperating one, as well as an affidavit from Nichole Matthews, an investigator for Autoone Insurance Company, that Halima, among others, sold his name to non-licensed non-medical professionals to incorporate “dummy or shell” corporations owned and controlled by others but carrying a licensed physician’s name to provide no-fault services which were billed to the named plaintiff seeking reimbursement for these no-fault services. While there may be some missing details, the New York Court of Appeals has held that the misconduct of the defendants complained of must be shown in some detail but particularity and/or specific conduct may await further discovery where it is impossible at this stage of the proceedings to detail the fraud. See, Lanzi v. Brooks, 43 NY2d 778, 402 NYS2d 384 (1977); Oxford Health Plans (NY) Inc. V. Bettercare Health Care Pain Management & Rehab P.C., 305 AD2d 223, 762 NYS2d 344 (1st Dept 2003).
Here, the plaintiff presents, through affidavits, and the substance of its allegations in its complaint, that the named defendants, Michael Scott Minick and Michelle Minick, hold and own controlling interests in fraudulent medical service corporations named as defendants which carry a licensed physician as the owner in name only for the sole purpose of seeking reimbursement under no-fault notwithstanding the proscription that only a medical corporation owned and controlled by a licensed physician may seek no fault insurance reimbursement. State Farm Mutual Insurance Co. V. Mallela et al., 4 NY3d 313, 794 NYS2d 700 (2005). In State Farm v. Mallela, supra , the Court also noted that no claims for fraud or unjust enrichment would lie for payments made prior to April 2002, necessarily providing the imprimatur that such claims would lie for such payments under fraud and unjust enrichment causes of action for payments after that date. Oxford Health Plans (NY) Inc. V. Bettercare Health Care Pain Management & Rehab P.C., supra . The plaintiff alleges that Michelle Minick acted in concert with Michael Scott Minick who is [*7]the true owner of the underlying medical corporations which are not owned or controlled by a licensed physician as required by law or by the rules and regulations promulgated by the New York Superintendent of Insurance. See, 11 NYCRR 65-3.16 (a). The motions by both defendants, Michelle Minick et al., and Michael Scott Minick et al., as to the 3rd cause of action sounding in fraud and the 5th cause of action sounding in unjust enrichment, are denied as the causes of action have been pled by the plaintiff with sufficient detail and particularity at this stage of the proceedings to inform the defendants of the nature of their alleged conduct and the claims being made against them.
As to the 4th cause of action sounding in punitive damages, the courts have long recognized that punitive damages are warranted where the conduct of the party being held liable evidences a high degree of moral culpability, where the conduct is so flagrant as to transcend mere recklessness or where the conduct constitutes wilful or wanton negligence or recklessness. Hale v. Odd Fellow & Rebekah Health Care Facility, Inc., 302 AD2d 948, 755 NYS2d 164 (4th Dept.. 2003); see also, Gellman v. Seawane Golf & Country Club, Inc., 24 AD3d 415, 805 NYS2d 411 (2nd Dept. 2005). An award of punitive damages can be premised on conduct particularly egregious in nature directed at both the plaintiff and the general public. National Broadcasting Co. Inc., v Fire Craft Services, Inc., 287 AD2d 408, 731 NYS2d 722 (1st Dept. 2001). It may also lie where the allegations in the complaint have a fraudulent or evil motive. U.S. Trust Corp. v. Newbridge Partners, LLC., 278 AD2d 172, 718 NYS2d 63 (1st Dept. 2000). Since the plaintiff alleges in its complaint the commission of a tort in the nature of a fraud, independent of any contractual claim, the cause of action alleging punitive damages is proper. See, Probst v. Cacoulidis, 295 AD2d 331, 743 NYS2d 509 (2nd Dept. 2002). The motions by both defendants, Michelle Minick et al.(seq.#
002), and Michael Scott Minick et al.(seq. #
004), as to the 4th cause of action seeking punitive damages is denied.
Finally, the defendant, Michael Scott Minick et al., seeks dismissal of the 1st and 2nd causes of action seeking declaratory judgment relief based upon the fraud in the ownership and licensing of the defendant medical professional corporations and the defendants’ failure to cooperate and that aspect of the motion is denied. As previously noted, the rules governing the Court’s review of a motion to dismiss pursuant to CPLR 3211 (a)(7) are both simple and straight forward. The Court must afford the complaint a liberal construction, accept as true the allegations contained therein, afford plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory. A review of the plaintiff’s complaints and submissions demonstrates sufficient claims and principles well recognized in the New York Court of Appeals’ decision in State Farm v. Mallela, supra , that there is no entitlement to no-fault reimbursement for a fraudulently incorporated medical corporation and the failure of the defendants to cooperate into a full airing of the underlying ownership and control of the various corporate entities by the individual defendants named is subject to the relief requested if established. For those reasons, [*8]the motion to dismiss the 1st and 2nd causes of action seeking declaratory judgment relief is denied.
Finally, the defendant, Mark Slamowitz, moves to change venue (seq. #
003) of this action from Suffolk County, New York to Kings County, New York pursuant to CPLR §503(c) and CPLR §509 for an improper forum or alternatively under CPLR §510 (3) on the grounds that the majority of the defendants reside and do business in Kings County. This motion to change venue is denied. Suffolk County is a proper forum and venue, in that the plaintiff maintains a principal office within it. Furthermore, it has been held that a demand to change venue based on the designation of an improper county must be served with the answer or before the answer is served. When a defendant fails to serve a timely demand to change venue and fails to make the motion for such relief within the statutory 15 day period provided, the motion becomes one addressed to the Court’s exercise of its sound discretion. See, Obas v. Grappell, 43 AD3d 431, 841 NYS2d 595 (2nd Dept. 2007).
On a motion to change venue pursuant to CPLR §510 (3) based upon the convenience of witnesses, the movant must establish the identity of the witnesses of the witnesses who allegedly will be inconvenienced, their willingness to testify and the nature of their anticipated testimony. Walsh v. Mystic Tank Lines Corp., 51 AD3d 908, 859 NYS2d 233 (2nd Dept. 2008); O’Brien v. Vassar Brothers Hospital, 207 AD2d 169, 622 NYS2d 284 (2nd Dept. 1995); Simeti v. Smithtown Fairfield Condominium, Inc., 172 AD2d 513, 567 NYS2d 860 (2nd Dept. 1991). In the absence of such a showing such a change of venue which is addressed to the sound discretion of the Court, should be denied. Countrywide Insurance Company v. Quinn, 268 AD2d 381, 703 NYS2d 2 (1st Dept. 2000). The defendant has failed to make a proper showing and therefore the motion is denied.
The foregoing constitutes the decision of the Court.
Dated: July 15, 2008_______________________________________
J.S.C.
Reported in New York Official Reports at MZ Dental, P.C. v Progressive Northeastern Ins. Co. (2004 NY Slip Op 24524)
| MZ Dental, P.C. v Progressive Northeastern Ins. Co. |
| 2004 NY Slip Op 24524 [6 Misc 3d 649] |
| December 23, 2004 |
| Bean, J. |
| District Court, Suffolk County |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, March 23, 2005 |
[*1]
| MZ Dental, P.C., as Assignee of Henry Maldanodo, Plaintiff, v Progressive Northeastern Insurance Company, Defendant. (And Six Other Actions.) |
District Court of Suffolk County, Third District, December 23, 2004
APPEARANCES OF COUNSEL
Edward Shapiro, P.C., Wantagh (Jason A. Moroff of counsel), for plaintiffs. Carman, Callahan & Ingham, Farmingdale (James M. Carmen and Jason Tenenbaum of counsel), for defendants.
{**6 Misc 3d at 649} OPINION OF THE COURT
Toni A. Bean, J.
{**6 Misc 3d at 650}A hearing was held on November 19, 2004 to address certain ethical concerns raised by irregularities in the papers submitted by plaintiffs’ counsel in the above-captioned actions, as set forth in this court’s interim memorandum decision and order dated October 28, 2004. Edward Shapiro and his associate Jason Moroff appeared at the hearing as directed, as well as counsel for the defendants.
The plaintiffs, represented by Edward Shapiro and his law firm, have moved for summary judgment in each of these seven actions for assigned first-party no-fault benefits. Each of the plaintiffs’ motions for summary judgment contains an affirmation by Edward Shapiro in which Mr. Shapiro affirms that the plaintiff’s “bills” were mailed on a particular date by “Edward Shapiro, Attorney at Law.” This affirmation has been offered to establish the timely mailing of each plaintiff’s no-fault claim as part of that plaintiff’s prima facie case.
In response to Mr. Shapiro’s affirmation, defendants Progressive Northeastern Insurance Company and General Assurance Co. have cross-moved for summary judgment and to disqualify Edward Shapiro as attorney for the plaintiffs under the witness-advocate rule, set forth at Disciplinary Rule 5-102 of the Code of Professional Responsibility (22 NYCRR 1200.21), on the ground that Mr. Shapiro’s testimony is necessary to establish a material element of each plaintiff’s cause of action.
The matter was set down for a hearing after it was noted that there were obvious differences in the signatures of Mr. Shapiro and his associate, Mr. Moroff, in papers filed with the court, and that affirmations submitted by Mr. Shapiro and Mr. Moroff contained patently contradictory and misleading language. Specifically, Mr. Shapiro’s affirmations in support of summary judgment indicated that he personally mailed each plaintiff’s no-fault claim, while Mr. Moroff’s affirmations opposing disqualification stated that a nonlawyer employee of the law firm submitted the claims and that “at no time does an attorney submit the bills to the insurance carrier.” These irregularities are of particular concern given the fact that Mr. Shapiro’s law firm has commenced hundreds of actions in the Third District Court on behalf of medical providers for assigned first-party no-fault benefits, and has brought similar motions for summary judgment in many of those actions. The stated purpose of the hearing was to determine whether counsel’s actions constituted sanctionable conduct under 22 NYCRR 130-1.1 (a).{**6 Misc 3d at 651}
At the hearing, both Mr. Shapiro and Mr. Moroff stated that the plaintiffs’ bills were not actually mailed by Mr. Shapiro, but by a representative of the firm. It was their contention that, at the time the bills were mailed to the carriers, the name of the firm was “Edward Shapiro, Attorney at Law.” In January of 2004, the firm’s name [*2]was changed to “Edward Shapiro, P.C.” Both maintained that the office inadvertently failed to change the template on the attorney’s “Affirmation” of mailing to read “Bills were sent . . . by Edward Shapiro, P.C.” Counsel for the plaintiffs contend that it was not their intent to deceive the court and expressed their apologies if that impression was given.
Although it is Mr. Shapiro’s assertion that it was not his intent to deceive the court as to who actually mailed the claims to the carriers, after reviewing the testimony of both Mr. Moroff and Mr. Shapiro, this court is constrained to conclude otherwise. It is this court’s opinion that Mr. Shapiro engaged in a pattern of behavior which can only be characterized as a deliberate attempt to mislead the court. Each affirmation in support of the motions for summary judgment sets forth the elements for establishing a prima facie case for a no-fault claim. The inclusion of the affirmation of mailing in each of these cases conclusively establishes the awareness by counsel that such documentation was an important element in determining whether summary judgment was appropriate. Moreover, it is inconceivable that Mr. Shapiro, whose practice involves substantial work in the no-fault field, was unaware that an affirmation or affidavit of mailing must be submitted by the person who actually did the mailing. (See, e.g., Comprehensive Mental v Lumbermens Mut. Ins. Co., 4 Misc 3d 133[A], 2004 NY Slip Op 50745[U] [App Term, 9th & 10th Jud Dists 2004]; Oceanside Med. Healthcare, P.C. v Progressive Ins., NYLJ, May 23, 2002, at 22, col 4; Vinings Spinal Diagnostic v Liberty Mut. Ins. Co., 186 Misc 2d 287, 290-291 [2000].)
The assertion that it was not their intent to deceive this court is further unbelievable upon this court’s review of Mr. Moroff’s affirmation in MZ Dental, Inc. v Progressive Northeastern Ins. Co. The affirmation of mailing by Mr. Shapiro states that the bills were mailed by “Edward Shapiro, Attorney at Law.” Mr. Moroff in his affirmation states: “In this instance Edward Shapiro, P.C. did not submit the bill in question” (emphasis added). However, in paragraphs 12 and 13, it states that an employee of their office mailed the bill. In raising these arguments in opposition to disqualifying Edward Shapiro, Esq. as attorney for plaintiff, {**6 Misc 3d at 652}it would stand to reason that his reference in paragraph 6 to “Edward Shapiro, P.C.” is in fact Edward Shapiro, Esq.
Notwithstanding the protestations of Mr. Moroff and Mr. Shapiro to the contrary, the language utilized by Mr. Shapiro, i.e., that the bills were mailed by “Edward Shapiro, Attorney at Law,” can only be construed as a representation that Mr. Shapiro personally mailed the bills. There can be no doubt that the statements purportedly made by Mr. Shapiro in these “affirmations” were deliberately false.
Equally disturbing to this court is Mr. Shapiro’s admission that none of the documents purportedly executed by Mr. Shapiro were, in fact, executed by him. Clearly, Mr. Shapiro cannot once again contend [*3]that it was not his intent to deceive the court. Pursuant to the Rules of the Chief Administrator of the Courts, all documents prepared by counsel that are “served on another party or filed or submitted to the court shall be signed by an attorney” (22 NYCRR 130-1.1a [a]). There was not a single excuse or good cause offered by counsel for his failure to execute any of these documents. Mr. Moroff similarly admitted that on at least two occasions he instructed someone else to sign his name to documents submitted to the court even though he was present in the office.
The original signature by counsel is intended to certify that the presentation of the papers or the contents contained therein are not frivolous. (See, 22 NYCRR 130-1.1a [b].) The purported unintended error in the attorney affirmation of mailing may be considered a mistake or an inadvertent error on the first few submissions of these similar motions. However, had counsel reviewed the moving papers, the error would have or should have been detected and corrected. The acknowledgment that the error was only corrected most recently, after this hearing was ordered, demeans the integrity of this court and the profession. The methods practiced by Mr. Shapiro and Mr. Moroff strongly suggest a greater interest in their own monetary benefit than in the integrity of the documents submitted.
Finally, Mr. Moroff and Mr. Shapiro contend that whether the affirmation of mailing satisfies a requirement of their prima facie case is no longer at issue once the carrier acknowledges receipt of the bill on the NF-10 denial of claim form. In support of their argument reference is made to the case of A.B. Med. Servs., PLLC v New York Cent. Mut. Fire Ins. Co. (3 Misc 3d 136[A], 2004 NY Slip Op 50507[U] [App Term, 2d & 11th Jud Dists 2004]).{**6 Misc 3d at 653}
Recognizing the court’s holding in A.B. Med. Servs., the finding therein is not applicable to at least three of the seven matters herein. In the cases of Olmecs v Progressive, Olmecs v General Ins. Co. and Olmecs v Progressive, an NF-10 was not contained in the moving or opposing papers. Accordingly, the plaintiff was required to make out a prima facie case in the first instance. However, as admitted by counsel, the affirmation of mailing was not executed by the person who actually mailed the bills. The plaintiff has therefore not established a prima facie case in these matters. In addition, the supporting affirmation of mailing was not actually executed by counsel.
In any event, such arguments are not relevant to the court’s concerns regarding counsel’s pattern of misrepresentation. An attorney, as an officer of the court, has an ongoing professional duty to state the truth in papers filed with the court. (See, Advisory Comm Notes, reprinted following NY Cons Laws Serv, Book 4C, CPLR 2106, at 440.) In acknowledgment of the attorney’s awareness of this duty and of the consequences for making a false statement, CPLR 2106 authorizes the attorney to simply sign his or her own statement [*4]and to affirm its truth subject to the penalties of perjury. Such affirmation has the same effect as an affidavit sworn to before a notary public. (See, V. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 2106.)
An “affirmation” of an attorney which has not been signed by the attorney is of no force and effect. (See, Matter of American Sec. Ins. Co. v Austin, 110 AD2d 697 [2d Dept 1985].) Moreover, an affidavit purported to be that of one person, but signed by another is worthless and a nullity. (See, A.B. Med. Servs. PLLC v CNA Ins. Co., 2 Misc 3d 138[A], 2004 NY Slip Op 50265[U] [App Term, 2d & 11th Jud Dists 2004]; Reboul, MacMurray, Hewitt, Maynard & Kristol v Quasha, 90 AD2d 466, 466 [1st Dept 1982], citing 1 NY Jur 2d, Acknowledgments, Affidavits, Oaths, Notaries and Commissioners § 58, at 257.) A falsely subscribed attorney’s affirmation is not only worthless, but may be sanctionable as well. (See, e.g., Park Health Ctr. v Country Wide Ins. Co., 1 Misc 3d 906[A], 2003 NY Slip Op 51529[U] [Civ Ct, Queens County 2003].)
In the court’s opinion, the failure of counsel to sign the affirmations filed with this court in each of these seven actions, without good cause shown, nullifies the motions. (See, 22 NYCRR 130-1.1a.) Plaintiffs’ motions for summary judgment are accordingly denied.{**6 Misc 3d at 654}
Similarly, in each of the actions the original summons and complaint, as admitted by counsel, does not bear his true signature. The fraudulent signatures offered by counsel in feigned compliance with the requirements of 22 NYCRR 130-1.1a are part of the pattern of deceptive practices engaged in by Mr. Shapiro and Mr. Moroff which has prejudiced the defendants in these actions. The court in its memorandum decision in these actions dated October 24, 2004 apprised Mr. Shapiro and Mr. Moroff of the differences in attorney signatures. This irregularity was one of the issues for which the hearing was scheduled. With full knowledge of the false signatures on the summonses and complaints, there was never an attempt or offer to correct the signatures in each action. Consequently, the complaint in each action shall be dismissed without prejudice. (See, 22 NYCRR 130-1.1a [a].) The cross motions are thereby moot.
Viewing the actions in totality, this court finds the actions of Mr. Shapiro and Mr. Moroff to be sanctionable under 22 NYCRR 130-1.2. Despite the comments by Mr. Moroff and Mr. Shapiro, these actions demonstrate an intent to deceive the court and their adversaries. Material factual statements were falsely presented to this court. This conduct is deemed frivolous and sanctionable. The egregious actions by counsel cannot be ignored. A total fine of $35,000 ($5,000 for each action) is hereby assessed against counsel for the plaintiffs to be paid to the Lawyers’ Fund for Client Protection, 119 Washington Avenue, Albany, New York 12210.