Harris v Direct Gen. Ins. Co. (2017 NY Slip Op 08961)

Reported in New York Official Reports at Harris v Direct Gen. Ins. Co. (2017 NY Slip Op 08961)

Harris v Direct Gen. Ins. Co. (2017 NY Slip Op 08961)
Harris v Direct Gen. Ins. Co.
2017 NY Slip Op 08961 [156 AD3d 1353]
December 22, 2017
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, February 7, 2018

[*1]

 Kenneth Harris, Respondent,
v
Direct General Insurance Company, Defendant, and Motor Vehicle Accident Indemnification Corporation, Appellant.

Bruno, Gerbino & Soriano, LLP, Melville (Nathan M. Shapiro of counsel), for defendant-appellant.

Cherundolo Law Firm, PLLC, Syracuse (John C. Cherundolo of counsel), for plaintiff-respondent.

Appeal from an order of the Supreme Court, Onondaga County (Deborah H. Karalunas, J.), dated February 15, 2017. The order, among other things, denied the motion of defendant Motor Vehicle Accident Indemnification Corporation seeking, in effect, a declaration that plaintiff is not entitled to no-fault insurance benefits from it.

It is hereby ordered that the order so appealed from is unanimously affirmed without costs.

Memorandum: Plaintiff commenced this action seeking, inter alia, a declaration that Motor Vehicle Accident Indemnification Corporation (defendant) is required to provide him with no-fault insurance benefits. Defendant now appeals from an order that, inter alia, denied its motion for summary judgment seeking, in effect, a declaration that plaintiff is not entitled to such benefits from defendant (see e.g. Leo v New York Cent. Mut. Fire Ins. Co., 136 AD3d 1333, 1333 [4th Dept 2016], lv denied 28 NY3d 902 [2016]; Ward v County of Allegany, 34 AD3d 1288, 1289 [4th Dept 2006]). We affirm.

Contrary to defendant’s contention, it failed to meet its burden on the motion of establishing as a matter of law that plaintiff was not entitled to no-fault insurance benefits. Insofar as relevant here, the Insurance Law provides that no-fault benefits are to be given “to a qualified person for basic economic loss arising out of the use or operation . . . of an uninsured motor vehicle” (Insurance Law § 5221 [b] [1]) and, in pertinent part, the statute defines a qualified person as “a resident of this state, other than an insured or the owner of an uninsured motor vehicle” (§ 5202 [b] [i]). Vehicle and Traffic Law § 128 defines an owner as, inter alia, “[a] person . . . having the property in or title to a vehicle or vessel.” We have previously stated that, “[g]enerally, ‘ownership is in the registered owner of the vehicle or one holding the documents of title[,] but a party may rebut the inference that arises from these circumstances’ ” (Martin v Lancer Ins. Co., 133 AD3d 1219, 1220 [4th Dept 2015]).

Here, in support of its motion, defendant submitted plaintiff’s testimony that he was the co-owner of the vehicle, and that he and his fiancée paid for the vehicle, its maintenance, and a Florida insurance policy that did not cover plaintiff. Nevertheless, defendant also submitted the registration, title, and insurance documents for the vehicle, all of which list plaintiff’s father as the owner. Consequently, Supreme Court properly determined that, inasmuch as “there is conflicting evidence of ownership, the issue must be resolved by a trier of fact” (id.). Because defendant did not meet its initial burden on the motion for summary judgment, “the burden never shifted to [plaintiff], and denial of the motion was required ‘regardless of the sufficiency of the opposing papers’ ” (Scruton v Acro-Fab Ltd., 144 AD3d 1502, 1503 [4th Dept 2016], quoting Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). Present—Smith, J.P., Carni, Curran and Winslow, JJ.

Brown v Government Empls. Ins. Co. (2017 NY Slip Op 08774)

Reported in New York Official Reports at Brown v Government Empls. Ins. Co. (2017 NY Slip Op 08774)

Brown v Government Empls. Ins. Co. (2017 NY Slip Op 08774)
Brown v Government Empls. Ins. Co.
2017 NY Slip Op 08774 [156 AD3d 1087]
December 14, 2017
Appellate Division, Third Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, February 7, 2018

[*1]

  Patricia Brown, Appellant, v Government Employees Insurance Company, Respondent.

E. Stewart Jones Hacker Murphy, LLP, Troy (Ryan M. Finn of counsel), for appellant.

Rivkin Radler LLP, Uniondale (Henry Mascia of counsel), for respondent.

Rumsey, J. Appeal from an order of the Supreme Court (Ferreira, J.), entered April 11, 2016 in Albany County, which partially granted defendant’s motion to partially dismiss the complaint.

Plaintiff alleged that she became permanently disabled as a result of injuries that she sustained in an automobile accident in March 2012. Following an independent medical examination (hereinafter IME), defendant denied no-fault insurance benefits on the basis that plaintiff’s injuries were preexisting and were not causally related to the accident. In December 2014, plaintiff commenced this action asserting causes of action for breach of contract, violation of General Business Law §§ 349 and 350 and intentional infliction of emotional distress, based on allegations that defendant pressured the physicians that it employed to conduct IMEs to attribute injuries to preexisting conditions and thereby facilitate the denial of claims, and seeking, among other relief, damages for emotional distress and punitive damages. In October 2015, defendant moved to dismiss the second and third causes of action—for violation of General Business Law §§ 349 and 350 and intentional infliction of emotional distress, respectively—and plaintiff’s claims for consequential damages, emotional distress damages and punitive damages. Supreme Court partially granted defendant’s motion by dismissing the second and third causes of action and plaintiff’s claims for emotional distress damages and punitive damages, but held that plaintiff had adequately stated a claim for consequential damages for economic loss and pain and [*2]suffering. Plaintiff now appeals.[FN1]

“On a motion to dismiss for failure to state a claim, the court must afford the complaint a liberal construction, accept as true the allegations contained therein, accord the plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory” (Shebar v Metropolitan Life Ins. Co., 25 AD3d 858, 859 [2006] [internal quotation marks, brackets and citations omitted]). “A cause of action to recover damages pursuant to General Business Law § 349 has three elements: first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act” (Benetech, Inc. v Omni Fin. Group, Inc., 116 AD3d 1190, 1190 [2014] [internal quotation marks and citations omitted], lv denied 23 NY3d 909 [2014]). In that regard, allegations that an insurer engaged in a practice of failing to investigate claims in good faith, or of denying claims without regard to their viability, are sufficient to state a cognizable claim for deceptive practices pursuant to General Business Law § 349 (see Ural v Encompass Ins. Co. of Am., 97 AD3d 562, 564-565 [2012]; Shebar v Metropolitan Life Ins. Co., 25 AD3d at 858-859; Joannou v Blue Ridge Ins. Co., 289 AD2d 531, 532 [2001]; Acquista v New York Life Ins. Co., 285 AD2d 73, 78, 82 [2001]). Moreover, “[t]he battle over whether [a] plaintiff can meet [his or] her obligation of a threshold showing that [his or] her claim was predicated upon a deceptive act or practice that was consumer oriented is best reserved for a motion for summary judgment after discovery” (Skibinsky v State Farm Fire & Cas. Co., 6 AD3d 975, 976 [2004] [internal quotation marks and citations omitted]).

In her complaint, plaintiff alleged that defendant engaged in a consumer-oriented pattern and practice aimed at the public at large of wrongfully denying claims for no-fault benefits by pressuring the physicians it hired to perform IMEs to provide medical reports that would support the denial of benefits and, further, that she suffered injury as a result of that practice. Such allegations are sufficient to plead a cause of action pursuant to General Business Law § 349 “ ’at this early prediscovery phase’ ” (Shebar v Metropolitan Life Ins. Co., 25 AD3d at 859 [brackets omitted], quoting Skibinsky v State Farm Fire & Cas. Co., 6 AD3d at 976).[FN2] Thus, Supreme Court erred in granting defendant’s motion to dismiss plaintiff’s General Business Law § 349 cause of action.

[*3] In her breach of contract claim, plaintiff seeks consequential damages, including damages for emotional distress. Supreme Court dismissed plaintiff’s claim for emotional distress damages and held that plaintiff had otherwise adequately pleaded a claim for consequential damages. We agree. It has long been the rule that “absent a duty upon which liability can be based, there is no right of recovery for mental distress resulting from the breach of a contract-related duty” (Wehringer v Standard Sec. Life Ins. Co. of N.Y., 57 NY2d 757, 759 [1982]; accord Johnson v Jamaica Hosp., 62 NY2d 523, 528-529 [1984]; see Hess v Nationwide Mut. Ins. Co., 273 AD2d 689, 690-691 [2000]; Klein v Empire Blue Cross & Blue Shield, 173 AD2d 1006, 1008 [1991], lv denied 78 NY2d 863 [1991]; Sweazey v Merchants Mut. Ins. Co., 169 AD2d 43, 45 [1991], lv dismissed 78 NY2d 1072 [1991]). As Supreme Court noted, plaintiff failed to satisfy this standard because she did not allege the existence of any relationship or duty between the parties separate from the contractual obligation.

We reject plaintiff’s argument that she may seek damages for emotional distress in light of Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y. (10 NY3d 187 [2008]) and Panasia Estates, Inc. v Hudson Ins. Co. (10 NY3d 200 [2008]), in which the Court of Appeals held, for the first time, that “consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were ‘within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting’ ” (Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d at 203, quoting Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d at 192 [internal quotation marks and citations omitted]). Although the Court of Appeals did not specifically consider the issue of whether damages were available for emotional distress when it decided Bi-Economy and Panasia, we conclude that it did not implicitly abandon the long-standing rule that damages for emotional distress for breach of contract are available only in certain limited circumstances, such as a willful breach accompanied by egregious and abusive behavior (see Johnson v Jamaica Hosp., 62 NY2d at 528-529).

In that regard, we note that the Second Department has continued to apply the rule of Wehringer v Standard Sec. Life Ins. Co. of N.Y. (supra) following Bi-Economy and Panasia (see Curtis-Shanley v Bank of Am., 109 AD3d 634, 635 [2013], appeal dismissed and lv denied 22 NY3d 1133 [2014]; Rakylar v Washington Mut. Bank, 51 AD3d 995, 996 [2008]). The Second Department has also held, based on a rule that existed prior to Bi-Economy and Panasia, that the scope of consequential damages permitted by Bi-Economy and Panasia does not include the expenses incurred when an insured commences affirmative litigation to enforce its rights under an insurance policy (see Santoro v GEICO, 117 AD3d 1026, 1028 [2014]; Stein, LLC v Lawyers Tit. Ins. Corp., 100 AD3d 622, 622-623 [2012]).[FN3] We agree that nothing in Bi-Economy or Panasia implicitly altered or abrogated previous rules limiting recovery of damages for breach of a contract-related duty. Rather, Bi-Economy and Panasia announced a new rule that extended the ability to recover consequential damages for breach of the covenant of good faith and fair dealing in the context of an insurance contract—a circumstance where they had not previously been available—subject to the same rules that otherwise limit recovery of damages for any breach of contract. Thus, Supreme Court properly dismissed plaintiff’s claim seeking damages for [*4]emotional distress.[FN4]

Plaintiff’s claim for punitive damages was likewise properly dismissed. Punitive damages may be recovered for breach of contract “only where a defendant’s conduct was (1) actionable as an independent tort, (2) egregious, (3) directed toward the plaintiff and (4) part of a pattern directed at the public” (Dinstber v Allstate Ins. Co., 110 AD3d 1410, 1411 [2013]). Plaintiff’s allegations that defendant engaged in unfair claim settlement practices do not allege a tort independent of the parties’ contract sufficient to state a claim for recovery of punitive damages (see id.; Cunningham v Security Mut. Ins. Co., 260 AD2d 983, 984-985 [1999], lv dismissed 94 NY2d 796 [1999]).

McCarthy, J.P., and Rose, J., concur.

Lynch, J. (concurring in part and dissenting in part). We concur in the majority statement, except insofar as the majority has determined that damages for emotional distress are not recoverable on plaintiff’s breach of contract claim. The majority correctly states the governing rule for consequential loss as defined by the Court of Appeals in Panasia Estates, Inc. v Hudson Ins. Co. (10 NY3d 200 [2008]) and Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y. (10 NY3d 187 [2008]). Those cases involved claims for consequential damages for breach of a commercial property insurance policy and in the context of business interruption insurance coverage (Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d at 202-203; Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d at 190-191). Neither case addressed damages for emotional distress, but confirmed that consequential damages are recoverable for a breach of the covenant of good faith and fair dealing “so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting” (Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d at 203 [internal quotation marks and citations omitted]). Given the nature and purpose of no-fault coverage, it is our view that the insured bargains for not only the monetary benefits, but also the intangible peace of mind that prompt payment will be made for medical expenses and lost wages emanating from injuries sustained in an automobile accident (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d at 193-194). Certainly, such a benefit is within the contemplation of the parties as an integral component of the contract (see Connolly v Peerless Ins. Co., 873 F Supp 2d 493, 506-507 [ED NY 2012]; Chernish v Massachusetts Mut. Life Ins. Co., 2009 WL 385418, *4, 2009 US Dist LEXIS 9617, *16-19 [ND NY, Feb. 10, 2009, No. 5:08-CV-0957 (GHL)]; Acquista v New York Life Ins. Co., 285 AD2d 73, 78-82 [2001]). For this reason, it is our view that plaintiff is entitled to seek damages for emotional distress on her breach of contract claim.

Egan Jr., J., concurs. Ordered that the order is modified, on the law, without costs, by reversing so much [*5]thereof as granted defendant’s motion to dismiss the General Business Law § 349 cause of action; motion denied to said extent; and, as so modified, affirmed.

Footnotes

Footnote 1:Plaintiff abandoned any arguments with respect to the General Business Law § 350 and intentional infliction of emotional distress claims by failing to address the dismissal of those claims in her brief on appeal (see McConnell v Wright, 151 AD3d 1525, 1526 n [2017]; Miller v Genoa AG Ctr., Inc., 124 AD3d 1113, 1114 n [2015]).

Footnote 2:Where, as here, the complaint asserts the material elements of a cause of action, the complaint may be amplified by allegations made in a bill of particulars (see ADC Chattels v Atlantic Dental Co., 169 AD2d 903, 903-904 [1991]; Lewis v Village of Deposit, 40 AD2d 730, 730 [1972], affd 33 NY2d 532 [1973]; see e.g. Ural v Encompass Ins. Co. of Am., 97 AD3d at 564). In her bill of particulars, plaintiff averred that defendant pressured IME physicians to issue medical reports that would wrongfully support the denial of claims specifically in instances where an insured had a preexisting injury.

Footnote 3:We decline to follow Acquista v New York Life Ins. Co. (285 AD2d 73 [2001]), which was decided prior to Bi-Economy and Panasia, to the extent that it suggests that damages for emotional distress are recoverable for breach of the covenant of good faith and fair dealing with respect to insurance contracts.

Footnote 4:In light of our determination that damages for emotional distress are not available in this action, as a matter of law, we need not consider whether such damages may have been foreseeable.

Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C. (2017 NY Slip Op 08007)

Reported in New York Official Reports at Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C. (2017 NY Slip Op 08007)

Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C. (2017 NY Slip Op 08007)
Nationwide Affinity Ins. Co. of Am. v Acuhealth Acupuncture, P.C.
2017 NY Slip Op 08007 [155 AD3d 885]
November 15, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, January 3, 2018

[*1]

 Nationwide Affinity Insurance Company of America et al., Respondents,
v
Acuhealth Acupuncture, P.C., et al., Appellants.

Gary Tsirelman, P.C., Brooklyn, NY (Stefan Belinfanti and David M. Gottlieb of counsel), for appellants.

McCormack & Mattei, P.C., Garden City, NY (John E. McCormack, Kevin A. Mattei, and Nicole Holler of counsel), for respondents.

In an action, inter alia, for a judgment declaring that the plaintiffs are not obligated to pay any past, pending, or future claims for no-fault benefits submitted to them by the defendants, the defendants appeal from an order of the Supreme Court, Nassau County (Bruno, J.), entered January 28, 2016, which granted the plaintiffs’ motion for summary judgment on the complaint.

Ordered that the order is reversed, on the law, with costs, and the plaintiffs’ motion for summary judgment on the complaint is denied.

The plaintiffs, which issue automobile insurance policies that include coverage under the No-Fault Automobile Insurance Law (see Insurance Law § 5101 et seq.), commenced this action against the defendants, five professional medical service corporations. The complaint sought, inter alia, a judgment declaring that the plaintiffs are not obligated to pay any past, pending, or future claims for no-fault benefits submitted to them by the defendants on the basis that the defendants were fraudulently incorporated in the names of licensed medical professionals, while in fact they were owned, operated, and controlled by Andrey Anikeyev, a nonphysician. The plaintiffs moved for summary judgment on the complaint. The Supreme Court granted the motion, and the defendants appeal.

“Insurance Law § 5102 et seq. requires no-fault carriers to reimburse patients (or, as in this case, their medical provider assignees) for ‘basic economic loss’ ” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 320 [2005]). However, “[a] provider of health care services is not eligible for reimbursement under section 5102 (a) (1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York” (11 NYCRR 65-3.16 [a] [12]). “State law mandates that professional service corporations be owned and controlled only by licensed professionals” (One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738, 740 [2008]; see Business Corporation Law §§ 1503 [a]; 1507, 1508). Thus, an insurance carrier may withhold payment for medical services provided by a professional corporation which has been “fraudulently incorporated” to allow nonphysicians to share in its ownership and control (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d at 319, 321; see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 150 AD3d 192, 194 [2017]; Liberty Mut. Ins. Co. v Raia Med. Health, P.C., 140 AD3d 1029, 1030-1032 [2016]; One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 [*2]AD3d at 739-740).

Here, the plaintiffs failed to meet their prima facie burden of demonstrating that the defendants were fraudulently incorporated in this manner. In support of their motion, the plaintiffs submitted nothing more than Anikeyev’s plea of guilty to a federal court Information that charged him generally with mail and health care fraud, and charged that substantial funds held in the defendants’ accounts were subject to forfeiture. The Information does not describe the manner in which the fraud was committed or how the funds came to be held in the defendants’ accounts. Thus, this evidence did not demonstrate, prima facie, that Anikeyev exercised dominion and control over the defendants and their assets and shared the risks, expenses, and interest in their profits and losses, or that he had a significant role in the guidance, management, and direction of their business (see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 150 AD3d at 201). Moreover, even assuming, as the plaintiffs do, that the presence of the forfeited funds in the defendants’ bank accounts demonstrated some level of control by Anikeyev over the bank accounts, such control could not, on its own, support a finding that he owned and controlled the defendants (id. at 202).

Since the plaintiffs failed to demonstrate their prima facie entitlement to judgment as a matter of law, the Supreme Court should have denied their motion for summary judgment without regard to the sufficiency of the defendants’ opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

In light of our determination, we need not reach the defendants’ remaining contentions. Dillon, J.P., Sgroi, Hinds-Radix and Iannacci, JJ., concur.

Country-Wide Ins. Co. v Gotham Med., P.C. (2017 NY Slip Op 07538)

Reported in New York Official Reports at Country-Wide Ins. Co. v Gotham Med., P.C. (2017 NY Slip Op 07538)

Country-Wide Ins. Co. v Gotham Med., P.C. (2017 NY Slip Op 07538)
Country-Wide Ins. Co. v Gotham Med., P.C.
2017 NY Slip Op 07538 [154 AD3d 608]
October 26, 2017
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, November 29, 2017

[*1]

 Country-Wide Insurance Company et al., Respondents,
v
Gotham Medical, P.C., Appellant.

The Russell Friedman Law Group, Lake Success (Charles Horn of counsel), for appellant.

Thomas Torto, New York, respondents.

Order, Supreme Court, New York County (Richard F. Braun, J.), entered November 25, 2015, which, inter alia, granted plaintiffs’ motion for summary judgment declaring that defendant is not entitled to no-fault insurance benefits from them with respect to the 31 claims at issue, unanimously affirmed, with costs.

The refusal by defendant’s principal, Dr. Alexandre Scheer, to answer questions at an examination under oath (EUO) about his compliance with a consent agreement and order he had entered into with the Office of Professional Medical Conduct (OPMC) constituted a failure to comply with the request for an EUO, a condition precedent to coverage under the insurance policy (see Hertz Corp. v Active Care Med. Supply Corp., 124 AD3d 411 [1st Dept 2015]).

Defendant argues that plaintiffs’ questions about Scheer’s compliance with the OPMC order were improper because the order is confidential. Defendant relies on Public Health Law § 230 (17), which provides that where an investigation of suspected professional misconduct by a physician reveals evidence insufficient to constitute misconduct but reasonable cause exists to believe the physician is unable to practice medicine with reasonable skill and safety, the physician may be ordered to have his or her practice monitored by another physician approved by OPMC, and any such order shall be kept confidential. However, this provision is inapplicable. Scheer entered into a consent agreement and order in which he did not contest the charge of fraudulent practice of medicine brought against him and he agreed to a penalty of a 12-month suspension of his license to practice medicine, a stay of the suspension, and, pursuant to Public Health Law § 230-a (penalties for professional misconduct), a 60-month term of probation, of which a monitor of his practice was only one condition. Moreover, the consent agreement and order states expressly that it shall be a public document.

Defendant also argues that plaintiffs had no independent right to determine whether Scheer was in compliance with the consent agreement and order and that any determination by them of noncompliance would not render him “unlicensed” to practice medicine. This argument is unavailing. The consent agreement and order provides that any medical practice in violation of the term permitting Scheer to practice only when monitored “shall constitute the unauthorized practice of medicine.” An unlicensed health care provider is ineligible to receive no-fault reimbursement (11 NYCRR 65-3.16 [a] [12]), and an insurer may make a good faith determination that a medical provider assignee seeking no-fault benefits is ineligible to receive such benefits (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 322 [2005]).

Defendant waived the defenses of res judicata and award and arbitration (CPLR 3211 [e]; see Mayers v D’Agostino, 58 NY2d 696 [1982]). While the arbitral awards in its favor were not [*2]issued until after it had filed its answer in this action, there is no indication on the record before us that defendant ever moved to amend its answer to assert either of those defenses. Concur—Tom, J.P., Manzanet-Daniels, Mazzarelli, Oing and Singh, JJ. [Prior Case History: 50 Misc 3d 712.]

Freligh v Government Empls. Ins. Co. (2017 NY Slip Op 05911)

Reported in New York Official Reports at Freligh v Government Empls. Ins. Co. (2017 NY Slip Op 05911)

Freligh v Government Empls. Ins. Co. (2017 NY Slip Op 05911)
Freligh v Government Empls. Ins. Co.
2017 NY Slip Op 05911 [152 AD3d 1145]
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, August 30, 2017

[*1]

1  James E. Freligh II, Respondent, v Government Employees Insurance Company, Appellant.

Thuillez, Ford, Gold, Butler & Monroe, LLP, Albany (Daisy Ford Paglia of counsel), for appellant.

Basch & Keegan, Kingston (Derek J. Spada of counsel), for respondent.

McCarthy, J.P. Appeal from an order of the Supreme Court (Gilpatric, J.), entered November 16, 2016 in Ulster County, which denied defendant’s motion for summary judgment dismissing the complaint.

On December 23, 2012, plaintiff allegedly sustained various injuries when the vehicle that he was operating was rear-ended by another vehicle. At the time of the accident, plaintiff, who had worked in the automotive parts and repair industry for a number of years, had been unemployed for approximately seven months. In January 2013, plaintiff submitted an application for no-fault benefits to defendant, his insurance carrier. With respect to the lost wages portion of the application, plaintiff indicated that he “was due to start [a] new job” but had been unable to work since December 23, 2012 as a result of the injuries that he had sustained in the accident. Plaintiff further indicated that details regarding his position, including his salary and the employer’s name and address, would be provided.

Plaintiff thereafter provided defendant with a copy of his employment application dated December 15, 2012, which reflected that plaintiff had been offered a job at VW Parts, Inc. (hereinafter the parts business) commencing on January 1, 2013 and at a salary of $2,000 per week, with benefits. Defendant requested additional documentation in support of plaintiff’s claim and, when such claim remained unpaid, plaintiff commenced this action seeking to recover no-fault benefits for the lost wages allegedly sustained. Defendant answered and raised plaintiff’s failure to provide proper verification of his claim as an affirmative defense. Following discovery, defendant moved for summary judgment dismissing the complaint—citing plaintiff’s [*2]failure to provide proper verification of his claim and asserting that the claim for lost wages was speculative. Supreme Court denied defendant’s motion, prompting this appeal. We reverse.

Insurance Law § 5102 (a) (2) provides that an individual who makes a claim under the no-fault law must be compensated for “[l]oss of earnings from work which the person would have performed had he [or she] not been injured” (see Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 458 [1980]). The statutory and regulatory provisions that govern the recovery of lost earnings “contemplate[ ] a degree of certainty in the calculation of lost wages” (Sharpe v Allstate Ins. Co., 14 AD3d 774, 775 [2005]). With respect to the recovery of lost earnings, the Legislature did not intend for plaintiffs to receive windfall recoveries or for insurance carriers to suffer undue financial hardship (see Kurcsics v Merchants Mut. Ins. Co., 49 NY2d at 457). Instead, the Legislature intended “to compensate the accident victim for the earnings he or she would have, in fact, realized” (id.). Consistent with this principle, a plaintiff is entitled to “demonstrated future earnings reasonably projected” (11 NYCRR 65-3.16 [b] [3]).

As an initial matter, we agree with plaintiff and our dissenting colleagues that, on this motion for summary judgment, we must treat as credible plaintiff’s testimony and the testimony of William Hrazanek, who was the sole shareholder of the parts business and who allegedly offered plaintiff employment (see Coyle v Bommarito, 106 AD3d 1324, 1327 [2013]; Tenkate v Tops Mkts., LLC, 38 AD3d 987, 989 [2007]). Thus, we credit Hrazanek’s claims, despite the fact that he admitted, among other things, that (1) he had previously pleaded guilty to the crimes of insurance fraud and offering a false instrument, (2) he had made false sworn statements in regard to the bankruptcy proceeding of a corporation, (3) he had initiated that bankruptcy proceeding as a “ruse” to forestall creditors and (4) he had paid his wife a salary from the parts business while she was a student at Columbia University for her “learning purposes.” Even while crediting Hrazanek’s and plaintiff’s claims, however, the record reveals that their contentions are immaterial to the issue of the reasonableness of plaintiff’s alleged projected future earnings as an employee of the parts business. Regardless of the genuineness of Hrazanek’s offer of employment, uncontested evidence regarding the parts business and its finances during the relevant time period establish as a matter of law that it is unreasonable to project that, but for plaintiff’s accident, the parts business would have actually employed plaintiff at a salary of $2,000 a week.

Here, the uncontested evidence established that the parts business was in physical and financial disrepair after Hurricane Irene struck in 2011 and that it remained in such a state at the time that plaintiff allegedly received a job offer and thereafter. Hrazanek testified that the parts business conducted its operations from three different locations—a warehouse, operating offices that were attached to garage bays and a junkyard. According to Hrazanek, the hurricane severely flooded the warehouse and destroyed $4.8 million of inventory held therein. The parts business never resumed operations at the warehouse. At the operating offices, the hurricane flooded cars that were in the yard, washing some away, and destroyed the inventory in the bays. Hrazanek explained that the actual offices and the parts inventory that were stored therein remained unaffected by the hurricane.

Further, Hrazanek testified that he had hired plaintiff because they had plans to open an automobile repair shop. Defendant made a Freedom of Information Law request to the Town of Middletown, Delaware County—where the parts business was located—in regard to any information indicating that Hrazanek or the parts business had made efforts to open an automobile repair shop. The Town’s response established that, between November 2012 and January 2013—the month that plaintiff was supposed to begin working—neither Hrazanek nor [*3]the parts business had submitted any applications for any relevant licences or certificates in regard to operating an automobile repair shop. Thus, despite Hrazanek’s claim that the parts business was “basing [its] future on [plaintiff]” in regard to their “plans to open up the [automobile] repair shop,” the uncontested evidence established that plaintiff would not have had any automobile repair shop to run in January 2013.[FN1] Hrazanek further acknowledged that he never opened such a repair shop.

Moreover, as additional evidence of the financial distress of the parts business, Hrazanek acknowledged that it was obligated to pay the lease on the warehouse and the operating offices, and that it ceased to do so after Hurricane Irene. In addition, the parts business’s financial records established that it paid three employees in December 2012, the month before plaintiff was allegedly intended to become an employee; Larissa Guselnikova, Hrazanek’s wife, was paid $1,442.31 per week, Bruce Hoornbeek was paid approximately $500 per week and Eric Preisendorfer was paid $1,325 per week. The records further indicate that as of January 2013, Preisendorfer was the only employee that remained on the payroll, and that the parts business did not pay him or any other employees after that month. A member of defendant’s special investigation unit visited the operating offices of the parts business in October 2013 and found the building padlocked and without any employees present. Finally, Hrazanek acknowledged that he sold the parts business in 2014 for $40,000.[FN2] Notably, this transaction indicates that the entire value of the parts business was equal to the value of 20 weeks of plaintiff’s projected salary, excluding the costs of plaintiff’s benefits and other employer obligations. Therefore, uncontested proof establishes that the parts business was in financial distress at the time that plaintiff was allegedly offered a job and that it ceased operations, at the latest, shortly after plaintiff’s anticipated start date.

Moreover, defendant provided proof that discounted the possibility that, had plaintiff been able to contribute his efforts to the parts business, it would not have failed and he would have received his alleged proposed salary. Defendant submitted evidence regarding plaintiff’s demonstrated ability to run an automobile repair business by submitting plaintiff’s deposition and certain of his tax returns. According to plaintiff, his most recent employment was owning and operating an automobile repair shop and gas station, which plaintiff explained went out of business due to the “economy.” Plaintiff’s tax returns provided objective evidence of his lack of success in owning and operating such a business; in 2012—the last year in which he owned and operated that business—he reported that it had a net loss of $6,923.

[*4] Considering the foregoing, Hrazanek’s and plaintiff’s subjective beliefs about the financial health of the parts business and/or their subjective beliefs about plaintiff’s skills are immaterial to the resolution of whether it is reasonable to project that the parts business would have employed plaintiff at a salary of $2,000 a week. In contrast, the uncontradicted evidence that the parts business was failing, that it had not made any efforts to acquire or open an automobile repair shop, and that, even if it had, plaintiff had a demonstrated history of being unable to run a profitable automobile repair shop all bear on the reasonableness of such a projection. That material evidence established as a matter of law that the projection that plaintiff would have received $2,000 a week from the parts business is unreasonable (see Sharpe v Allstate Ins. Co., 14 AD3d at 775; see generally Bailey v Jamaica Buses Co., 210 AD2d 192, 192 [1994]). Accordingly, defendant’s motion for summary judgment dismissing the complaint should have been granted. This determination renders academic defendant’s alternative argument for dismissal, that plaintiff failed to provide proper verification of his claim.

Rose and Devine, JJ., concur.

Egan Jr., J. (dissenting). The crux of defendant’s argument upon appeal is that, as of the filing of plaintiff’s application for no-fault benefits, his alleged future employer, VW Parts, Inc. (hereinafter the parts business), “was a defunct business” and, therefore, “there was no actual employment available to plaintiff.” Absent a legitimate job opportunity, defendant’s argument—and the majority’s premise—continues, plaintiff’s claim for lost wages is entirely speculative, thereby warranting dismissal thereof. We disagree and, therefore, respectfully dissent.

To our analysis, the majority has engaged in an unduly narrow reading of the record—seizing upon those facts that would militate in favor of dismissing plaintiff’s claim while discounting any proof that could reasonably be construed as supporting plaintiff’s contention that he had a legitimate job offer and, hence, that his future earnings were in fact reasonably projected. In this regard, it bears repeating that, on a motion for summary judgment, we must view the evidence “in the light most favorable to the nonmoving party, who is afforded the benefit of every reasonable inference” to be drawn therefrom (Hall v Queensbury Union Free Sch. Dist., 147 AD3d 1249, 1250 [2017]; see Giglio v Saratoga Care, Inc., 117 AD3d 1143, 1145 [2014]). Applying that standard to the record before this Court, we find questions of fact as to whether plaintiff indeed had a bona fide position with the parts business effective January 1, 2013 and, further, whether plaintiff would have been able to begin work at the stated salary but for the intervening motor vehicle accident.

As the majority has recounted at length, there indeed is no question that the parts business and its sole shareholder, William Hrazanek, had—in the wake of Hurricane Irene—fallen on hard times. Against this backdrop, however, the record nevertheless reflects that, on or about December 15, 2012, Hrazanek offered plaintiff, whom he had known for approximately 15 years, a position as a parts specialist and warehouse manager; plaintiff’s employment in that capacity was to commence on January 1, 2013, and his salary was slated to be $2,000 per week (including benefits). Although plaintiff’s projected salary exceeded the salaries paid to other employees of the parts business, Hrazanek testified that no one else possessed plaintiff’s qualifications and that he was effectively “basing [the] future” of his business upon plaintiff’s expertise. Hrazanek further testified that plaintiff “had worked at numerous Audi dealers and had been to all of the schools and so forth,” leading Hrazanek to conclude that plaintiff was the [*5]person he needed to “expand the business and get back on track after the flood.”[FN1] Plaintiff’s affidavit in opposition to defendant’s motion largely echoed Hrazanek’s account of plaintiff’s hiring—with plaintiff averring that he was offered and accepted a position with the parts business eight days before the accident occurred, that he was scheduled to begin work in January 2013 and that, as a result of the accident, he was unable to do so. According to plaintiff, who had more than 25 years of experience in the automotive parts industry, his new position with the parts business would consist of dismantling vehicles and warehousing the individual parts, and he would utilize his extensive knowledge and experience regarding “which parts fit which vehicles and which parts [were] interchangeable” to “facilitate the sale of vehicle parts.” As of December 2012, plaintiff averred, the parts business had “about 1,500 to 2,000 intact cars awaiting to have [their] parts stripped, labeled and warehoused.”[FN2] In light of such proof, we agree with Supreme Court that, as noted previously, the record as a whole contains questions of fact as to whether plaintiff indeed had a bona fide position with the parts business effective January 1, 2013 and, further, whether plaintiff would have been able to begin work at the stated salary but for the intervening motor vehicle accident.

In reaching a contrary conclusion, the majority relies upon, among other things, the fact that, after plaintiff’s anticipated start date came and went, the parts business ceased operations altogether and ultimately was sold. This salient fact, however, cuts both ways. In other words, while the majority cites the eventual failure of the parts business as support for the proposition that it was a defunct operation from the very beginning, the failure of such business also lends credence to Hrazanek’s claim that the entire future of his overall business hinged upon hiring someone with plaintiff’s particular and demonstrated skill set.

The majority’s reliance upon plaintiff’s purported lack of success in running his own business is, to our analysis, similarly misplaced. Even assuming, without deciding, that the majority’s interpretation of plaintiff’s tax returns indeed leads to the inevitable conclusion that he would be unable to singlehandedly operate a successful automobile repair business, the fact remains that plaintiff was offered a position as a parts specialist and warehouse manager, that—as noted previously—plaintiff had more than 25 years of experience in the automotive parts industry and that, whatever other inventory Hrazanek may have lost in the hurricane or whatever other financial setbacks he may have suffered, the parts business had—as of December 2012—[*6]between 1,500 and 2,000 vehicles waiting to be dismantled and sold for parts. As for the majority’s conclusion that “the actual value of the parts business, which would include those vehicles and their parts, was $40,000,” we do not subscribe to the implicit assumption that the eventual “fire sale” value of the business necessarily was indicative of the value of the underlying inventory as of January 2013. Nor are we persuaded that the ultimate sale price obtained by Hrazanek—once plaintiff was injured—somehow bears upon whether Hrazanek could have met plaintiff’s promised salary had their business relationship gone forward.

Finally, our conclusions in this regard are not, as the majority suggests, predicated upon Hrazanek’s and plaintiff’s subjective beliefs as to either the financial viability of the parts business, the success of the planned repair shop or the breadth of plaintiff’s automotive skills. Rather, the issue distills to—and our analysis is focused upon—whether, based upon a review of the record as a whole and construing all of the proof contained therein in the light most favorable to plaintiff, plaintiff’s future earnings were reasonably projected. In reversing and granting defendant summary judgment, the majority does what is not ours to do—judge the credibility of the witnesses. Given the conflicting proof, we think that Supreme Court was right to let a jury judge plaintiff’s account.

Mulvey, J., concurs. Ordered that the order is reversed, on the law, with costs, motion granted and complaint dismissed.

Footnotes

Footnote 1:When Hrazanek claimed that the future of the business depended on plaintiff, he was referring to his plan to have plaintiff operate an automobile repair shop. Despite being deposed twice, Hrazanek never stated that he had any plans for plaintiff to dismantle vehicles for parts, let alone that plaintiff dismantling vehicles and selling parts—the work that the parts business was already engaged in—was the future of the parts business.

Footnote 2:Plaintiff claimed that the parts business had 1,500 to 2,000 vehicles waiting to be dismantled and sold for parts. Nonetheless, the uncontradicted evidence remains that the actual value of the parts business, which would include those vehicles and their parts, was $40,000.

Footnote 1:According to the majority, “[w]hen Hrazanek claimed that the future of the business depended on plaintiff, he was referring to his plan to have plaintiff operate an automobile repair shop.” While that is one possible interpretation of Hrazanek’s testimony, we read Hrazanek’s testimony in a more neutral fashion—leading to the conclusion that Hrazanek generally viewed plaintiff as an asset to building and/or rebuilding the various components of the business.

Footnote 2:While the majority makes much of the fact that Hrazanek did not expressly state that plaintiff’s job would include dismantling vehicles and selling their parts, plaintiff’s affidavit makes clear that he understood that such tasks would be part of his new position—a fact born out by the employment application that plaintiff completed and Hrazanek signed, which reflects that plaintiff was being hired as a parts specialist and warehouse manager.

Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC (2017 NY Slip Op 06065)

Reported in New York Official Reports at Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC (2017 NY Slip Op 06065)

Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC (2017 NY Slip Op 06065)
Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC
2017 NY Slip Op 06065 [153 AD3d 606]
August 9, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, September 27, 2017

[*1]

 Global Liberty Insurance Co., Appellant,
v
Surgery Center of Oradell, LLC, as Assignee of Beauvoir Fekier, Respondent.

The Law Office of Jason Tenenbaum, P.C., Garden City, NY, for appellant.

In an action for a judgment declaring that the plaintiff is not obligated to pay certain no-fault insurance benefits on the ground that the services rendered to the defendant’s assignor were not medically necessary, the plaintiff appeals from an order of the Supreme Court, Nassau County (Brown, J.), entered September 22, 2016, which denied its unopposed motion pursuant to CPLR 3215 for leave to enter a default judgment upon the defendant’s failure to appear or answer the complaint.

Ordered that the order is affirmed, without costs or disbursements.

In February 2016, the plaintiff commenced this action pursuant to Insurance Law § 5106 (c) seeking de novo adjudication of a dispute regarding the defendant’s entitlement to receive payment for medical services rendered to its assignor. After the defendant did not appear or answer the complaint, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment. The Supreme Court denied the plaintiff’s unopposed motion on the ground that the plaintiff had not submitted sufficient facts to support its claim. On this appeal, we affirm, but for a different reason.

A plaintiff seeking leave to enter a default judgment must file proof of proper service of the summons and the complaint, the defendant’s default, and the facts constituting the claim (see CPLR 3215 [f]; Fried v Jacob Holding, Inc., 110 AD3d 56, 59 [2013]).

The plaintiff averred that it served the defendant, a foreign limited liability company not authorized to conduct business in New York, pursuant to Limited Liability Company Law § 304. As relevant to the plaintiff’s contentions, that statute requires three things. First, service upon the unauthorized foreign limited liability company may be made by personal delivery of the summons and complaint, with the appropriate fee, to the Secretary of State (see Limited Liability Company Law § 304 [b]). Second, in order for the personal delivery to the Secretary of State to be “sufficient,” the plaintiff must also give the defendant direct notice of its delivery of the process to the Secretary of State, along with a copy of the process. The direct notice may be sent to the defendant by registered mail, return receipt requested, to the defendant’s last known address (see Limited Liability Company Law § 304 [c] [2]). Third, after process has been delivered to the Secretary of State and direct notice of that service has been sent to the defendant, the plaintiff must file proof of service with the clerk of the court. That proof of service must be in the form of an “affidavit of compliance.” The affidavit of compliance must be filed with the return receipt within 30 days after the plaintiff [*2]has received the return receipt from the post office. Service of process shall be complete 10 days after the affidavit of compliance has been filed with the clerk with a copy of the summons and complaint (Limited Liability Company Law § 304 [c] [2]). Strict compliance with Limited Liability Company Law § 304 is required, including as to the filing of an “affidavit of compliance” (see Interboro Ins. Co. v Tahir, 129 AD3d 1687, 1689 [2015]; cf. Flick v Stewart-Warner Corp., 76 NY2d 50, 57 [1990]). Where the plaintiff has failed to demonstrate strict compliance, the plaintiff will not be entitled to a default judgment (see Interboro Ins. Co. v Tahir, 129 AD3d at 1689). Here, the plaintiff failed to submit an affidavit of compliance with the return receipt within 30 days after it received the return receipt from the post office. Accordingly, the plaintiff’s unopposed motion for leave to enter a default judgment was properly denied (see id.).

In light of our determination, we need not address the plaintiff’s remaining contention. Balkin, J.P., Austin, Roman and LaSalle, JJ., concur.

State Farm Mut. Auto. Ins. Co. v Austin Diagnostic Med., P.C. (2017 NY Slip Op 05992)

Reported in New York Official Reports at State Farm Mut. Auto. Ins. Co. v Austin Diagnostic Med., P.C. (2017 NY Slip Op 05992)

State Farm Mut. Auto. Ins. Co. v Austin Diagnostic Med., P.C. (2017 NY Slip Op 05992)
State Farm Mut. Auto. Ins. Co. v Austin Diagnostic Med., P.C.
2017 NY Slip Op 05992 [153 AD3d 576]
August 2, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, September 27, 2017

[*1]

 State Farm Mutual Automobile Insurance Company, Respondent,
v
Austin Diagnostic Medical, P.C., Appellant.

Cardillo Law PC, Brooklyn, NY (Harry A. Cardillo of counsel), for appellant.

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

In an action for a judgment declaring that the plaintiff is not obligated to pay certain no-fault insurance benefits, the defendant appeals from an order of the Supreme Court, Queens County (Dufficy, J.), entered February 29, 2016, which denied its motion to extend its time to answer, or in the alternative, to compel the plaintiff to accept the untimely answer.

Ordered that the order is affirmed, with costs.

The plaintiff insurance company commenced this action against the defendant, seeking a judgment declaring that it was not obligated to pay certain no-fault insurance benefits because the defendant failed to appear for examinations under oath. The defendant filed an answer approximately 31/2 months after the statutory time to file an answer had expired. The plaintiff rejected the answer as untimely, and the defendant moved to extend its time to answer, or in the alternative, to compel the plaintiff to accept the untimely answer. The Supreme Court denied the motion, and the defendant appeals.

To compel the plaintiff to accept an untimely answer as timely or to extend the time for a defendant to answer, a defendant must provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action (see Ryan v Breezy Point Coop., Inc., 76 AD3d 523, 524 [2010]; Juseinoski v Board of Educ. of City of N.Y., 15 AD3d 353 [2005]). Here, the defendant submitted an answer which was verified only by its attorney and an affirmation from its attorney who did not have personal knowledge of the facts. These documents were insufficient to demonstrate that the defendant had a potentially meritorious defense to the action (see Salch v Paratore, 60 NY2d 851 [1983]; Ryan v Breezy Point Coop., Inc., 76 AD3d at 524; Juseinoski v Board of Educ. of City of N.Y., 15 AD3d 353 [2005]).

The parties’ remaining contentions either are without merit or have been rendered academic in light of our determination.

Accordingly, the Supreme Court providently exercised its discretion in denying the defendant’s motion. Dillon, J.P., Austin, Hinds-Radix and LaSalle, JJ., concur.

Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (2017 NY Slip Op 04068)

Reported in New York Official Reports at Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (2017 NY Slip Op 04068)

Country-Wide Ins. Co. v Valdan Acupuncture, P.C. (2017 NY Slip Op 04068)
Country-Wide Ins. Co. v Valdan Acupuncture, P.C.
2017 NY Slip Op 04068 [150 AD3d 560]
May 23, 2017
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, June 28, 2017

[*1]

 In the Matter of Country-Wide Ins. Co., Appellant,
v
Valdan Acupuncture, P.C., as Assignee of Latonya Frazier, Respondent.

Jaffe & Koumourdas, LLP, New York (Jean H. Kang of counsel), for appellant.

Gary Tsirelman, P.C., Brooklyn (Stefan Belinfanti of counsel), for respondent.

Judgment, Supreme Court, New York County (Geoffrey D. Wright, J.), entered on or about April 7, 2016, in respondent’s favor, unanimously affirmed, with costs.

Petitioner failed to establish any of the grounds for vacating an arbitration award (CPLR 7511 [b], [c]; see generally Azrielant v Azrielant, 301 AD2d 269, 275 [1st Dept 2002], lv denied 99 NY2d 509 [2003]).

Pursuant to Insurance Department Regulations (11 NYCRR) § 65-3.16 (a) (12), “insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims” (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319 [2005]). Assuming without deciding that an insurer’s defense of fraudulent incorporation cannot be precluded (see AVA Acupuncture, P.C. v AutoOne Ins. Co., 28 Misc 3d 134[A], 2010 NY Slip Op 51350[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; Bath Med. Supply, Inc. v Allstate Indem. Co., 27 Misc 3d 92, 95 [App Term, 2d Dept, 9th & 10th Jud Dists 2010]), we conclude that the master arbitrator properly confirmed the award of the arbitrator, who reviewed petitioner’s submissions relating to the plea of guilty to no-fault insurance fraud by a man married to the owner of respondent, found that respondent was not mentioned once in the “hundreds of pages” submitted, and rejected petitioner’s attempt to hold the owner “responsible by association.” Petitioner’s reliance on a subsequent arbitration (in 2014) is also misplaced; among other things, the later arbitration appears to have relied on documentation that was not submitted to the arbitrator in this case.

Contrary to petitioner’s contention, there was no default in this case. In any event, any delay in opposing the petition to vacate the arbitration award was short and quickly corrected, and the explanation given for it—law office failure—was detailed and specific, and, in view of the strong public policy favoring resolution of litigation on the merits, constituted “good cause” for the delay (see Lamar v City of New York, 68 AD3d 449 [1st Dept 2009]).

Respondent is entitled to attorneys’ fees for this appeal (11 NYCRR 65-4.10 [j] [4]), calculated, in accordance with 11 NYCRR 65-4.6 (b), as 20% of the no-fault benefits awarded. Concur—Acosta, P.J., Renwick, Mazzarelli, Andrias and Manzanet-Daniels, JJ.

State Farm Mut. Auto. Ins. Co. v RLC Med., P.C. (2017 NY Slip Op 03979)

Reported in New York Official Reports at State Farm Mut. Auto. Ins. Co. v RLC Med., P.C. (2017 NY Slip Op 03979)

State Farm Mut. Auto. Ins. Co. v RLC Med., P.C. (2017 NY Slip Op 03979)
State Farm Mut. Auto. Ins. Co. v RLC Med., P.C.
2017 NY Slip Op 03979 [150 AD3d 1034]
May 17, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, June 28, 2017

[*1]

 State Farm Mutual Automobile Insurance Company, Respondent,
v
RLC Medical, P.C., et al., Appellants.

Law Offices of Melissa Betancourt, P.C., Brooklyn, NY (Frank D’Esposito of counsel), for appellants.

McDonnell Adels & Klestzick, PLLC, Garden City, NY (Stuart Flamen of counsel), for respondent.

Appeal from an order of the Supreme Court, Kings County (Jules L. Spodek, J.), dated June 2, 2015. The order, insofar as appealed from, directed that the administrator of the defendant Estate of Ronald L.L. Collins appear for a deposition.

Ordered that on the Court’s own motion, the notice of appeal is deemed to be an application for leave to appeal from so much of the order as directed that the administrator of the defendant Estate of Ronald L.L. Collins appear for a deposition, and leave to appeal is granted (see CPLR 5701 [c]); and it is further,

Ordered that the order is reversed insofar as appealed from, on the law, with costs.

The plaintiff insurance company commenced this action against, among others, the defendant Estate of Ronald L.L. Collins, seeking a judgment declaring, inter alia, that the plaintiff has no obligation to pay no-fault claims for medical services purportedly rendered by Collins. In an order dated June 2, 2015, the Supreme Court, inter alia, directed that the administrator of Collins’s estate (hereinafter the administrator) appear for a deposition. The defendants appeal from that portion of the order.

CPLR 3101 (a) (1) provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action.” The terms “material and necessary” in this statute “must ‘be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity’ ” (Matter of Kapon v Koch, 23 NY3d 32, 38 [2014], quoting Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]; see D’Alessandro v Nassau Health Care Corp., 137 AD3d 1195, 1196 [2016]). “At the same time, a party is ‘not entitled to unlimited, uncontrolled, unfettered disclosure’ ” (D’Alessandro v Nassau Health Care Corp., 137 AD3d at 1196, quoting Geffner v Mercy Med. Ctr., 83 AD3d 998, 998 [2011]). “ ’It is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims’ ” (D’Alessandro v Nassau Health Care Corp., 137 AD3d at 1196, quoting Crazytown Furniture v Brooklyn Union Gas Co., 150 AD2d 420, [*2]421 [1989]). Here, the plaintiff made no showing that conducting the deposition of the administrator will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims (see Black v Budget Rent A Car Corp., 224 AD2d 350 [1996]; Crazytown Furniture v Brooklyn Union Gas Co., 150 AD2d at 421).

The parties’ remaining contentions are without merit.

Accordingly, the Supreme Court improperly directed that the administrator appear for a deposition. Rivera, J.P., Hall, LaSalle and Connolly, JJ., concur.

Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C. (2017 NY Slip Op 03888)

Reported in New York Official Reports at Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C. (2017 NY Slip Op 03888)

Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C. (2017 NY Slip Op 03888)
Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C.
2017 NY Slip Op 03888 [150 AD3d 498]
May 16, 2017
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, June 28, 2017

[*1]

 Fiduciary Insurance Company of America, Respondent,
v
Medical Diagnostic Services, P.C., et al., Defendants, and Star of N.Y. Chiropractic Diagnostic, P.C., Appellant.

Law Office of Gregory A. Goodman, P.C., Hauppauge (Gregory A. Goodman of counsel), for appellant.

Rubin, Fiorella & Friedman LLP, New York (David F. Boucher, Jr. of counsel), for respondent.

Order and judgment (one paper), Supreme Court, New York County (Shlomo Hagler, J.), entered January 6, 2017, which denied defendant Star of N.Y. Chiropractic Diagnostic, P.C.’s (Star) motion for attorneys fees against plaintiff, unanimously affirmed, with costs.

“It is well settled in New York that a prevailing party may not recover attorneys’ fees from the losing party except where authorized by statute, agreement or court rule” (U.S. Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 597 [2004]; see also Gotham Partners, L.P. v High Riv. Ltd. Partnership, 76 AD3d 203, 205 [1st Dept 2010], lv denied 17 NY3d 713 [2011]). While an insured party may recover attorneys’ fees where it successfully defends against its insurer’s action seeking a declaratory judgment that it has no duty to defend or indemnify its insured (see Underwriters Ins. Co., 3 NY3d at 597; Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21 [1979]), “[t]he reasoning behind [the award of such attorneys’ fees] is that an insurer’s duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer’s declaratory judgment action” (Underwriters Ins. Co., 3 NY3d at 597-598). Here, plaintiff owes defendant Star no duty to defend, as Star is merely seeking reimbursement for chiropractic services rendered to the claimant in this no-fault action. While Star was assigned the claimant’s rights for such reimbursement, the claimant was merely the injured party in the taxi at the time of the accident, and plaintiff owed no duty to defend the claimant. Star, as assignee of the claimant’s rights, could acquire no greater rights than its assignor (see New York & Presbyt. Hosp. v Country-Wide Ins. Co., 17 NY3d 586, 592 [2011]), and did not acquire any right to a defense from plaintiff. Thus, the court properly held that Star was not entitled to attorneys’ fees in this case.

[*2] We have examined Star’s remaining arguments, including its public policy argument, and find them to be unavailing. Concur—Sweeny, J.P., Renwick, Andrias, Feinman and Gesmer, JJ.