Matter of Long Is. Ins. Co. (2009 NY Slip Op 50003(U))

Supreme Court, Kings County

5647/06

Plaintiff Attorney:Lawrence N. Rogak, LLC

Defendant Attorney:Brooke Lombardi, Esq.

Subin Associates LLP

Yvonne Lewis, J.

Counsel for Long Island Insurance Company has petitioned this court for a tripartite order to restore this action to the active calendar on the grounds that it was ministerially marked disposed by clerical error, amend the petition to include the affirmative defenses of fraud and lack of capacity to contract (renewal policies) since the insured is deceased, and grant it summary judgment on the basis of newly discovered evidence heretofore concealed by the respondent; to wit, the respondent, the pedestrian victim of a hit and run on November 16, 2005, intentionally failed to disclose (to the petitioner/insurer) that his father, who died on July 10, 2001, was the named insured under the insurance policy through which he asserts his claims for no-fault and uninsured motorist benefits and continued to renew bi-annually despite his passing. In addition, the petitioner notes that the subject policy itself provides, in salient part, that it may not be assigned without its written consent; that upon the death of the named insured, coverage will be provided for the legal representative (a role which the respondent has not established for himself herein) only with respect to the legal representative’s responsibility to maintain or use the covered vehicle; and, that the coverage will extend only until the end of the policy period, in this instance April 28, 2002. The petitioner notes further that Couch on Insurance, 3d Ed., §29:13 clearly provides that there is no contract to renew in the absence of a clear intent to that effect; that

“. . .because contract requires mutual assent of parties and meeting of minds, no contract can be formed between insurer and decedent (citing, Von Hillman v. colonial Penn Ins. Co., 19 Kan. App.2d 375, 869 P2d 248[1994]); and, that “a representative of a deceased insured’s estate has no authority to renew the policy in the insured’s behalf without informing the insurer of the insured’s death.”

As further evidence of the respondent’s duplicity, the petitioner notes that in December 2006, he cashed a partial premium refund with the “obviously” forged signature of his father, and that in an examination under oath conducted on May 16, 2008, the respondent testified that his [*2]father (who died on July 10, 2001) was the policyholder, furnished his father’s current address, and advised that he never owned a car and that he drove his father’s.

Counsel for petitioner furnished a supplemental affirmation in support of his request for summary judgement on the basis of the October 10, 2008 Appellate Division, Fourth Department case of Geico Ins. Co. v. Battaglia, 2008 NY Slip Op 07736, which held that the subject Insurance Company had “. . .established as a matter of law that its policy, as renewed, was void ab initio based on the material misrepresentation with respect to the [insured’s] status, i.e., that [the insured] was deceased” (referencing, Matter of Mercury Ins. Group v. Ocana, 46 AD3d 561). Counsel also notes that his initial October 11, 2007 motion to stay the arbitration had been denied without prejudice for his inadvertence in not having included a complete copy of the subject policy in his moving papers.

In opposition, counsel for Israel Greenfield, the respondent herein, asserts that the motion to restore should be denied inasmuch as the court repeatedly set motion schedules for petitioner to file orders to show cause on the ground of the insured’s undisclosed death, failed to adhere to the same, and instead filed the instant motion for summary judgment on the same ground. In addition, counsel argues that the request to amend the petition must also be denied as untimely inasmuch as CPLR §3024( c) clearly provides that a motion to correct pleadings shall be served within twenty days after service of the challenged pleading. Furthermore, counsel urges this court to deny the petitioner’s motions for a permanent stay of arbitration and for summary judgment as moot given that an arbitration hearing was held on September 10, 2008, the petitioner had a full and fair opportunity to participate therein, and the plain fact that an arbitrator’s award may not be vacated unless it is found that the arbitrator’s award lacked a rational basis (citing, Matter of Prudential Pro. & Cas. Ins. Co. v. Carleton, 145 AD2d 492 [2d Dept., 1988]). So too, CPLR Rule 3211 provides for dismissal of an action on the ground that an arbitration award has been rendered.

Respondent additionally argues that the petitioner’s allegation of fraud and lack of capacity to have renewed the subject insurance policy does not meet the separate standards for a stay of arbitration which requires a prima facie showing of non-coverage and summary judgment that necessitates a demonstration as to the absence of material issues of fact. To the contrary, the respondent maintains that though his father was the named insured he is nonetheless covered under the subject policy as a listed driver and hence an additional named insured on which basis he continued to renew the said policy rather than the imputed intent to wilfully conceal, deceive, misrepresent, or mislead that the petitioner alleges. The respondent also argues that his unfamiliarity with the terms of the policy and any requirement to disclose his father’s death is attributable solely to the fact that he was merely an additional insured and not a party to the initial contract; hence, a mistake or oversight, not fraud.

The petitioner has also moved this court, pursuant to CPLR 7511, for an order to vacate the arbitration award in the matter sub judice on the ground that there was no valid agreement to arbitrate. In fact, the petitioner asserts that the American Arbitration Association proceeded with its scheduled arbitration on September 10, 2008 despite having been advised that a request for a permanent stay of arbitration had been made to this court. In addition, the renewed policy under which the petitioner sought no-fault and uninsured motorists benefits was void ab initio (prior to the date of the subject accident) due to the policyholder’s unreported death. The petitioner also [*3]notes that its request for a temporary restraining order to stay the mentioned arbitration was denied by this court, following which on October 15, 2008, the respondent (son of the decedent policyholder) was awarded $100,000.00.

In opposition, the respondent asserts that none of the CPLR 7511 grounds for vacatur of an arbitration award has been met by the respondent who participated in the process by submitting discovery materials in connection therewith; to wit, respondent has not established that his rights were prejudiced by corruption, fraud, or misconduct in procuring the award; partiality of the arbitrator; the arbitrator exceeded his powers; the arbitrator failed to make a final and definite award; or a procedural failure that was not waived. In addition, the respondent contends that petitioner’s failure to have moved for a stay of arbitration prior to its conduct renders the present motion therefor untimely (citing, Bevona v. Valencia, 191 AD2d 192, 594 NYS2d 223 [1st Dept., 1993]) as does his participation in said proceeding via the discovery materials submitted and reviewed by the arbitrator who also gave the petitioner thirty days post arbitration to submit documentation in support of its contentions which identically undergird its motions for summary judgment and to vacate. Furthermore, the respondent notes that the purported affidavit in support of the petitioner’s motion to vacate is fatally defective in that its president’s signature is absent therefrom. In any event, the respondent argues that the failure to have apprised the insurer of the insured’s death in no way increased the former’s risk such that it can be said that the policy would not have been renewed in the respondent’s name. In this vein, the respondent asserts that cancellation of an automobile insurance policy may be prospective only, even if the application is deceptive or fraudulent (citing, Aetna Cas. & Surety Co. v. O’Connor, 8 NY2d 359; Matter of Liberty Mutual Ins. Co. v. McClellan, 127 AD2d 767; Middlesex Ins. Co. v. Carrero, 103 AD2d 694; and Teeter v. allstate Ins. Co., 9 AD2d 176, Aff’d 9 NY2d 655), and argues that “an insurer should not be permitted to raise fraud, which should have been discoverable upon a reasonable inquiry, as a basis for denying coverage to innocent third parties injured in an accident” (citing New Hampshire Indemnity Co. v. Flores, 2002 NY Slip Op 40024 [1]).

In addition to opposing the petitioner’s motion to vacate, the respondent has moved, pursuant to CPLR §7510, to confirm the above mentioned arbitration award decided on October 20, 2008. In support of that request, the respondent reasserts the fact that no stay had been in effect on September 10, 2008 when the arbitration was held, and that the petitioner’s request for a temporary restraining order on October 3, 2008 was denied. In addition to remaking its arguments in opposition to vacatur, the respondent notes that CPLR §7510 makes it clear that the court shall confirm such an award within one year after its delivery unless the same is vacated or modified upon a ground specified in CPLR §7511, none of which has been met by the petitioner, as discussed above.

In response, the petitioner reasserted its arguments in support of vacatur to the effect that the instant renewed insurance policy under which the arbitration was conducted was void ab initio as a result of the respondent having concealed the fact that his father, the policyholder, had died a little over four years prior to the subject accident.

This court agrees with the petitioner’s assertion that “because contract requires mutual assent of parties and meeting of minds, no contract can be formed between insurer and decedent (citing, Couch on Insurance, 3d Ed., §29:13 and Von Hillman v. colonial Penn Ins. Co., 19 Kan. [*4]App.2d 375, 869 P2d 248[1994]). It must also be conceded, as asserted by the respondent, that a stay of arbitration requires a prima facie showing of non-coverage and summary judgment necessitates a demonstration as to the absence of material issues of fact.

It is the respondent’s position that although his father was the named insured he is nonetheless covered under the subject policy as a listed driver and hence an additional named insured on which basis he continued to renew his father’s policy rather than the imputed intent to wilfully conceal, deceive, misrepresent, or mislead that the petitioner alleges. That the respondent was holding himself out as his father and had a fraudulent intent in renewing his father’s policy is made clear by his answers to the examination under oath wherein he identified his father as the insured, furnished his then deceased father’s current residential address, etc. and his earlier cashing of a refund check made out to his then deceased father.

In the Matter of Fireman’s Fund Insurance Company v. Freda, 156 AD2d 364, 548 NYS2d 319, the Appellate Division, Second Department, made it clear that the insurer waived any right to assert grounds not raised as a basis for denying coverage in its original letter of disclaimer in its petition to stay arbitration (citing, Insurance law §3420[d]; General Acc. Ins. Group v.Cirucci, 46 NY2d 862, 414 NYS2d 512). In said case the insurer had initially only asserted that the injured person was not a covered person and had not raised claims of untimely notice, failure to promptly send copies of legal papers, and settlement without its consent which were therefore deemed waived. The court went on to add, [h]owever, the first ground, that [the injured party] was not a “covered person,” constitutes a potentially valid basis for the denial of liability because Fireman’s Fund made no contract of insurance with the person injured in the accident (citing, United Serv. Auto. Assn. v. Meier, 89 AD2d 998, 454 NYS2d 319). Consequently, Fireman’s Fund was not required by Insurance law §3420(d) to give timely written notice of its first asserted ground for disclaiming coverage (citing, Zappone v. Home Ins. Co., 55 NY2d 131, 447 NYS2d 911; Matter of Aetna Cas. & Sur. Co. v. Facciponti, 133 AD2d 60, 519 NYS2d 3). The court thereupon remitted the matter for an evidentiary hearing to determine if in fact the injured party had been a resident of the household of the policyholder on the date of the accident as a condition precedent to arbitration.

In the instant case, there is no issue to be decided by evidentiary hearing since, assuming arguendo, that the respondent had effectively renewed the insurance policy herein, the plain fact is that he could not by any stretch of the imagination, much less contractual definition, logic, or common sense have been a resident of the decedent’s household since that is legally and factually impossible.

The issue of a stay of arbitration has been rendered moot since it was held and a decision rendered. However, an arbitrator’s award may be vacated on the grounds specified in CPLR 7511(b); to wit, (i)corruption, fraud, or misconduct in procuring the award; or (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or (iii) an arbitrator, or agency, or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection. In the matter sub judice, this court finds that the arbitrator did exceed his power in having made an award in an instance where no coverage existed. Put another way, the arbitrator in order to have arrived at his decision was [*5]necessarily required to make a finding that the respondent was a “covered person;” i.e., a member of the insured’s household which in this instance would have called for him to “absurdly” find that the respondent was resident of a Ghost’s household. Consequently, this court hereby vacates the arbitrator’s October 20, 2008 ruling, above referenced, on the basis of irrationality and grants summary judgment to the petitioner on the issue of non-coverage inasmuch as it has been irrefutably established that the respondent was not a covered person. The petitioner and respondent’s respective motions to confirm said award and to amend are accordingly denied as moot. This constitutes the decision and order of this Court.

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