American Transit Insurance Company, Plaintiff, against Jeremy Martinez, EMPRESS AMBULANCE SERVICE, FOREST PARK ACUPUNCTURE PC, NEIGHBORHOOD MEDICAL HEALTH CARE PC, NEW YORK HEIGHTS MEDICAL PC, PAIN PHYSICIANS NY PLLC, WELLMART RX INC, Defendants.

651486/2019

Larkin Farrell LLC, New York, NY (William Larkin of counsel), for plaintiff.

Law Offices of Gary Tsirelman P.C., Brooklyn, NY (Jung Pryjma of counsel), for defendant Wellmart RX Inc.

Gerald Lebovits, J.

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiff American Transit Insurance Company. Defendant Jeremy Martinez was in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by American Transit. Martinez assigned the right to collect no-fault benefits under that policy to various treating medical providers, including defendant Wellmart RX Inc. Wellmart applied for no-fault benefits, which American Transit denied.

American Transit brought this action for a declaratory judgment that it is not required to pay no-fault benefits to Martinez or to the other defendants (all medical-provider assignees of Martinez). Wellmart was the only defendant that appeared in the action. American Transit moved for default judgment under CPLR 3215 against Martinez and several of the other non-appearing defendants.

This court granted the default-judgment motion without opposition. The court issued a declaration that Martinez and the non-appearing providers “are not entitled to no-fault benefits as a result of a motor vehicle accident involving Jeremy Martinez . . . due to Jeremy Martinez’s failure to appear for duly scheduled independent medical examinations.” (NYSCEF No. 34 at 1-2 [capitalization omitted].) The court also severed and continued the action as against the remaining defendants, including Wellmart. (See id. at 2.)

American Transit now moves for summary judgment under CPLR 3212 against Wellmart. The motion is denied.

DISCUSSION

The Effect of This Court’s Prior Default-Judgment Order

American Transit argues that because Wellmart is Martinez’s assignee, Wellmart’s claim for benefits is derivative of Martinez’s rights under the no-fault policy—and thus that the default judgment against Martinez ousted Wellmart’s right to claim benefits. This court disagrees. Decades ago, the Appellate Division held that when an assignment of no-fault benefits is made prior to the institution of legal action, a decision on default against the assignor does not bar the assignee from asserting a claim to no-fault benefits. (See Lakeside Hosp. v Government Empls. Ins. Co., 70 AD2d 658, 658 [2d Dept 1979], citing Gramatan Home Inv. Corp. v Lopez, 46 NY2d 481, 486-487 [1979].)

To be sure, in Lakeland Hospital the court noted that the assignee was not a party to the prior arbitration. Here, as American Transit points out, Wellmart is a party defendant. But although Wellmart is a party to this action, it was not a party to the prior motion. To the contrary, American Transit’s motion papers expressly stated that “[n]o relief is sought at this time with respect to” Wellmart. (NYSCEF No. 20 at 1.) This court’s prior order in this action, although it “awarded a default judgment to [American Transit] against [Wellmart’s] assignor . . . did not declare the rights of [American Transit] as against [Wellmart].” The default-judgment order thus does not have preclusive effect on the current summary-judgment motion. (Jamaica Wellness Medical, P.C. v Mercury Casualty Co., 2018 NY Slip Op 51128[U], at *2 (App Term 2d Dept 2018]; accord Ultimate Health Prods., Inc. v Ameriprise Auto & Home, 57 Misc 3d 9, 11 [App Term 2d Dept 2017].)

American Transit argues that the grant of default judgment against Martinez had the effect of declaring that the no-fault policy was void, leaving Martinez without any claim to benefits that he could [*2]have assigned to Wellmart in the first place. But the judgment that American Transit requested from this court, and which this court entered, did not reach so far. As noted above, the default judgment merely declared that Wellmart (and the other non-appearing defendants) are not entitled to benefits, without going on to declare that the no-fault policy itself was void. (See NYSCEF No. 34 at 1-2.) In any event, in Lakeland Hospital, the arbitration decision entered on the assignor’s default sustained the insurer’s argument that the assignor had no claim to benefits as a result of her no-fault policy having been canceled outright prior to the occurrence—and thus prior to any assignment—for nonpayment of premiums. (See 70 AD2d at 658.) The Second Department nonetheless held that this prior arbitration decision did not preclude the assignee from claiming a right to benefits. (See id.)

American Transit thus is not entitled to summary judgment against Wellmart based merely on this court’s prior default-judgment order against Martinez.

Whether American Transit is Entitled to Summary Judgment on the Merits

Alternatively, American Transit argues that Martinez’s failure to appear for scheduled independent medical examinations (IMEs) defeats coverage under the no-fault policy, and thus forecloses Wellmart’s claim to benefits. This court is not persuaded.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) One such requirement is that if the insurer requests additional verification of a no-fault claim in the form of an IME, the IME must be scheduled to occur “within 30 calendar days from the date of receipt of the prescribed verification forms.” (11 NYCRR § 65-3.5 [d].) American Transit has not shown that it satisfied this 30-calendar-day timeframe. The documents submitted by American Transit show at most that the first IME was scheduled to be held 26 days after the date of the scheduling notice. (See NYSCEF No. 41 at 17.) Those documents do not reflect when American Transit received the prescribed verification form, as required to determine whether the IME’s scheduled date satisfied the 30-day requirement.^[FN1] Given this failure of proof, American Transit has not satisfied its initial prima facie burden at summary judgment. (See Longevity Medical Supply, 131 AD3d at 841.)^[FN2]

American Transit argues that these deadlines apply only to “medical examinations that are necessary to determine if [a] particular claim should be paid,” as opposed to “being scheduled for a more broad reason, ie to determine, generally, if the claimant needs future treatment.” (NYSCEF No. 47 at 12-13.) Even assuming for the sake of argument that this interpretive argument is correct, it does not avail American Transit here.

The record evidence on this motion reflects only that American Transit received Martinez’s NF-2 benefits application on October 2, 2017 (see NYSCEF No. 41 at 11-14 [mailroom stamp and date/time footer]), and prepared an IME scheduling notice 10 days later, on October 12, 2017 (see id. at 17). That short time period itself suggests a connection between Martinez’s initial benefits claim and the scheduling of an IME. More fundamentally, there is no record evidence indicating any other purpose for holding the [*3]IME that could even potentially take that IME out of the scheduling framework of 11 NYCRR § 65-3.5 (b) through (d).

Accordingly, for the foregoing reasons it is hereby

ORDERED that American Transit’s motion under CPLR 3212 for summary judgment in its favor as to defendant Wellmart is denied.

8/21/2020

Footnotes

Footnote 1:American Transit has provided the NF-2 claim form provided by Martinez, which contains markings indicating that American Transit received the form on October 2, 2017, 36 days before the IME date. (See NYSCEF No. 41 at 11-14 [mailroom stamp and date/time footer].) But it has not provided the NF-3 verification form.

Footnote 2:In arguing that it could deny no-fault coverage due to Martinez’s failure to appear for IMEs even if those IMEs were not timely scheduled (see NYSCEF No. 54 at 5-10), American Transit does not mention the First Department’s decision in Longevity Medical Supply.

American Transit Insurance Company, Plaintiff, against Marsillant Wildex, ATLANTIC DIAGNOSTICS LLC, BL HEALTHY LIFE ACUPUNCTURE PC, CITY WIDE HEALTH FACILITY INC, CP MEDICAL DIAGNOSTIC SERVICES PC, CURE CARE PHARMACY INC, DANIMARK PHYSICAL THERAPY PC, DV CHIROPRACTIC CARE PC, FIVE PALMS ACUPUNCTURE PC, FRANK SAUCHELLI, MARINA GADABORSHEV, METROPOLITAN SPECIALTY LABS INC, OUTREACH MANUAL PHYSICAL THERAPY PC, PRO BALANCE CHIROPRACTIC PC, PSYCHOLOGY AFTER ACCIDENT PC, ROBERT LUCA, SUFFICIENT CHIROPRACTIC CARE PLLC, SUPER SCRIPT PHARMACY, and WEI DAO ACUPUNCTURE PC, Defendants.

650105/2019

Larkin Farrell LLC, New York, NY (William Larkin of counsel), for plaintiff.

Law Offices of Gary Tsirelman P.C., Brooklyn, NY (Jung Pryjma of counsel), for defendant City Wide Health Facility Inc.

Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 002) 46, 47, 48, 49, 50, 51, 52, 53, 54, 55 were read on this motion to/for SUMMARY JUDGMENT.

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiff American Transit Insurance Company. Defendant Marsillant Wildex was in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by American Transit. Wildex assigned the right to collect no-fault benefits under that policy to various treating medical providers, including defendant City Wide Health Facility Inc. City Wide applied for no-fault benefits, which American Transit denied.

American Transit brought this action for a declaratory judgment that it is not required to pay no-fault benefits to Wildex or to the other defendants (all medical-provider assignees of Wildex). City Wide was the only defendant that appeared in the action. American Transit moved for default judgment under CPLR 3215 against Wildex and the other non-appearing defendants.

This court granted the default-judgment motion without opposition. The court issued a declaration that Wildex and the non-appearing providers “are not entitled to no-fault benefits as a result of a motor vehicle accident involving Marsillant Wildex . . . due to Marsillant Wildex’s failure to appear for duly scheduled independent medical examinations.” (NYSCEF No. 39 at 2-3 [capitalization omitted].) The court also severed and continued the action as against City Wide. (See id. at 3.)

American Transit now moves for summary judgment under CPLR 3212 against City Wide. The motion is denied.

DISCUSSION

The Effect of This Court’s Prior Default-Judgment Order

American Transit argues that because City Wide is Wildex’s assignee, City Wide’s claim for benefits is derivative of Wildex’s rights under the no-fault policy—and thus that the default judgment against Wildex ousted City Wide’s right to claim benefits. This court disagrees. Decades ago, the Appellate Division held that when an assignment of no-fault benefits is made prior to the institution of legal action, a decision on default against the assignor does not bar the [*2]assignee from asserting a claim to no-fault benefits. (See Lakeside Hosp. v Government Empls. Ins. Co., 70 AD2d 658, 658 [2d Dept 1979], citing Gramatan Home Inv. Corp. v Lopez, 46 NY2d 481, 486-487 [1979].)

To be sure, in Lakeland Hospital the court noted that the assignee was not a party to the prior arbitration. Here, as American Transit points out, City Wide is a party defendant. But although City Wide is a party to this action, it was not a party to the prior motion. To the contrary, American Transit’s motion papers expressly stated that “[n]o relief is sought at this time with respect to” City Wide. (NYSCEF No. 27 at 2.) This court’s prior order in this action, although it “awarded a default judgment to [American Transit] against [City Wide’s] assignor . . . did not declare the rights of [American Transit] as against [City Wide].” The default-judgment order thus does not have preclusive effect on the current summary-judgment motion. (Jamaica Wellness Medical, P.C. v Mercury Casualty Co., 2018 NY Slip Op 51128[U], at *2 (App Term 2d Dept 2018]; accord Ultimate Health Prods., Inc. v Ameriprise Auto & Home, 57 Misc 3d 9, 11 [App Term 2d Dept 2017].)

American Transit argues that the grant of default judgment against Wildex had the effect of declaring that the no-fault policy was void, leaving Wildex without any claim to benefits that he could have assigned to City Wide in the first place. But the judgment that American Transit requested from this court, and which this court entered, did not reach so far. As noted above, the default judgment merely declared that Wildex (and the other non-appearing defendants) are not entitled to benefits, without going on to declare that the no-fault policy itself was void. (See NYSCEF No. 39 at 2-3.) In any event, in Lakeland Hospital, the arbitration decision entered on the assignor’s default sustained the insurer’s argument that the assignor had no claim to benefits as a result of her no-fault policy having been canceled outright prior to the occurrence—and thus prior to any assignment—for nonpayment of premiums. (See 70 AD2d at 658.) The Second Department nonetheless held that this prior arbitration decision did not preclude the assignee from claiming a right to benefits. (See id.)

American Transit thus is not entitled to summary judgment against City Wide based merely on this court’s prior default-judgment order against Wildex.

Whether American Transit is Entitled to Summary Judgment on the Merits

Alternatively, American Transit argues that Wildex’s failure to appear for scheduled independent medical examinations (IMEs) defeats coverage under the no-fault policy, and thus forecloses City Wide’s claim to benefits. This court is not persuaded.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) One such requirement is that if the insurer requests additional verification of a no-fault claim in the form of an IME, the IME must be scheduled to occur “within 30 calendar days from the date [*3]of receipt of the prescribed verification forms.” (11 NYCRR § 65-3.5 [d].) American Transit has not shown that it satisfied this 30-calendar-day timeframe. To the contrary, the documents submitted by American Transit indicate that the first IME was scheduled to be held 43 days after the date of the scheduling notice itself. (See NYSCEF No. 48 at 20.) Given this failure of proof, American Transit has not satisfied its initial prima facie burden at summary judgment. (See Longevity Medical Supply, 131 AD3d at 841.)^[FN1]

American Transit argues that these deadlines apply only to “medical examinations that are necessary to determine if [a] particular claim should be paid,” as opposed to “being scheduled for a more broad reason, ie to determine, generally, if the claimant needs future treatment.” (NYSCEF No. 54 at 12-13.) Even assuming for the sake of argument that this interpretive argument is correct, it does not avail American Transit here.

The record evidence on this motion reflects only that American Transit received Wildex’s NF-2 benefits application on July 31, 2017 (see NYSCEF No. 48 at 11-14 [mailroom stamp and date/time footer]), and prepared an IME scheduling notice 16 days later, on August 16, 2017 (see id. at 20). That short time period itself suggests a connection between Wildex’s initial benefits claim and the scheduling of an IME. More fundamentally, there is no record evidence indicating any other purpose for holding the IME that could even potentially take that IME out of the scheduling framework of 11 NYCRR § 65-3.5 (b) through (d).

Accordingly, for the foregoing reasons it is hereby

ORDERED that American Transit’s motion under CPLR 3212 for summary judgment in its favor as to defendant City Wide is denied.

Defendants.

8/21/2020

Footnotes

Footnote 1:In arguing that it could deny no-fault coverage due to Wildex’s failure to appear for IMEs even if those IMEs were not timely scheduled (see NYSCEF No. 54 at 5-10), American Transit does not mention the First Department’s decision in Longevity Medical Supply.

AMERICAN TRANSIT INSURANCE COMPANY, Plaintiff, against ELVINA BOOKMAN et al., Defendants.

Index No. 161280/2018

The Law Office of Daniel J. Tucker, Brooklyn, NY (R. Jacob Lamar of counsel), for plaintiff.

The Rybak Law Firm, PLLC, Brooklyn, NY (Oleg Rybak of counsel), for defendants Acupuncture Now, P.C., Healthway Medical Care, P.C., Jules Francois Parisien, M.D., and SB Chiropractic, P.C.

Gerald Lebovits, J.

This motion concerns plaintiff’s potential obligation to pay no-fault insurance benefits. Defendant Elvina Bookman was a passenger in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by plaintiff American Transit Insurance Company. Bookman applied for no-fault benefits, which American Transit denied.

In this action, American Transit seeks a declaratory judgment that it is not required to pay no-fault benefits to Bookman or to the other defendants (medical providers acting as Bookman’s assignees). American Transit now moves for summary judgment on this claim under CPLR 3212 as against those defendants who have appeared in the action, and moves for default judgment under CPLR 3215 as against the remaining, non-appearing defendants. The motion is denied.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) American Transit has not satisfied that requirement here.

Section 65-3.5 provides among other things that once an insurer receives a claim for benefits, the insurer has 10 business days to provide the claimant with the forms that it requires for verification of the claim. (See 11 NYCRR § 65-3.5 [a].) Once the insurer receives the completed verification forms, it then has 15 business days to request further verification, such as an examination under oath. (See id. § 65-3.5 [b].)

Here, the record reflects that American Transit received an NF-2 benefits application form from Bookman on August 2, 2018. And the record reflects that American Transit requested on August 28, 2018, that Bookman appear for an examination under oath. Yet nothing in the record (whether in the form of an affidavit or documentary evidence) might establish when American Transit sent the necessary verification forms to Bookman, or when American Transit received the completed verification forms back from Bookman. Absent that information, American Transit has failed to satisfy all the elements of its claim for declaratory relief.

American Transit thus is not entitled to summary judgment under CPLR 3212 against the answering defendants. Similarly, to obtain a default judgment against the non-appearing defendants American Transit is required to provide proof (such as an affidavit) of all the facts necessary to establish its prima facie entitlement to relief. (See CPLR 3215 [f]; Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999].) American Transit has not met that requirement here, and thus is not entitled to default judgment, either.

Accordingly, it is hereby

ORDERED that the branch of American Transit’s motion seeking summary judgment under CPLR 3212 against the answering defendants is denied; and it is further

ORDERED that the branch of American Transit’s motion seeking default judgment under CPLR 3215 against the non-appearing defendants is denied.

Date: 5/27/20

UNITRIN ADVANTAGE INSURANCE COMPANY, Plaintiff, against ANDREW J. DOWD, M.D., Defendant.

Index No. 156945/2016

Goldberg, Miller & Rubin, P.C., New York, NY (Harlan R. Schreiber and Timothy R. Bishop of counsel), for plaintiff.

Economou & Economou, P.C., Syosset, NY (Ralph C. Caio of counsel), for defendant.

Gerald Lebovits, J.

This motion concerns whether plaintiff Unitrin Advantage Insurance Company must pay approximately $12,000 in no-fault insurance benefits to defendant Andrew J. Dowd, M.D. (plus interest and attorney fees), for two surgeries Dr. Dowd performed in 2011.

BACKGROUND

Several individuals (nonparties in this action) allegedly suffered a collision while in a vehicle covered by a no-fault insurance policy issued by Unitrin. One individual, Quente Wright, was treated by Dr. Dowd. In July 2011, Dr. Dowd operated on Wright. Dowd submitted a benefits claim to Unitrin for that surgery (for $5,943.59), which Unitrin received on August 1, [*2]2011. In September 2011, Dowd performed a second surgery on Wright, and submitted a second claim to Unitrin (for $6,106.56), which Unitrin received on October 7, 2011.

Unitrin was skeptical that Wright had been involved in a legitimate, rather than staged, collision. It was similarly skeptical that Wright had sustained any injuries requiring surgery. On September 22, 2011, Unitrin mailed to Dr. Dowd a request that he appear for an examination under oath (EUO) to answer questions about the medical necessity of the first surgery. The EUO was scheduled for October 6, 2011. Dr. Dowd did not appear for the EUO. Unitrin sent him a second letter, on October 11, 2011, requesting that he appear for a rescheduled EUO on October 25. Dowd again did not appear. Unitrin denied Dowd’s benefits claims for both surgeries based on his repeated failure to appear for an EUO.

Dr. Dowd disputed Unitrin’s denial of his claims for benefits. That dispute has a somewhat lengthy and involved procedural history that is not relevant here. What matters now is that in the current action, Unitrin is seeking a declaratory judgment that Dr. Dowd is not entitled to benefits. Dowd moves for summary judgment under CPLR 3212. He argues that he has established as a matter of law that he properly submitted claims for medical services rendered and that Unitrin failed to issue a timely denial of those claims. Unitrin cross-moves for summary judgment under CPLR 3212. According to Unitrin, Dr. Dowd failed to appear for a timely and properly scheduled EUO about the services that he claimed to have provided. Unitrin argues that it therefore properly denied the two claims

As to the benefits claim relating to the first surgery, Dr. Dowd’s motion is granted, and Unitrin’s cross-motion is denied. As to the benefits claim relating to the second surgery, Dr. Dowd’s motion is denied, and Unitrin’s cross-motion is granted.

DISCUSSION

A provider of medical services can establish a prima facie showing of entitlement to summary judgment by submitting admissible proof that the requisite claim forms were mailed and received by the carrier and that the payment is overdue. (See Insurance Law § 5106 [a]; New York & Presbyterian Hosp. v Countrywide Ins. Co., 44 AD3d 729, 843 [2d Dept 2007].) Here, Unitrin does not contest that it received the requisite claim forms from Dr. Dowd or that the claims remain unpaid. Unitrin argues instead that Dowd is not entitled to benefits because he, as Wright’s assignor, violated the terms of the applicable no-fault policy by failing to appear for an EUO upon request.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each procedural and timeliness requirement of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) Among other things, § 65-3.5 provides that once an insurer receives the verification forms for a pending claim for benefits, the insurer then has 15 business days to seek further verification—for example, through requesting a claimant to appear for an EUO. (See id. § 65-3.5 [b]; Unitrin Advantage Ins. Co. v All of NY, Inc., 158 AD3d 449, 449 [1st Dept 2018].) A claimant’s failure [*3]without reasonable cause to appear for a timely and properly scheduled EUO is grounds to deny coverage.

Here, Unitrin does not seriously contest that its EUO requests were untimely as to the first surgery: The first request was mailed out on September 22, 2011, well beyond the 15-day period following Unitrin’s August 1 receipt of the benefits claim for the first surgery. Unitrin argues, though, that the EUO requests were timely as to the second surgery—and that Dr. Dowd’s failure to appear for an EUO means that Unitrin is entitled to deny benefits for both surgeries. This court disagrees.

To be sure, Unitrin’s starting premise is correct: A no-fault insurer may properly request an individual covered by no-fault insurance to appear for an EUO prior to receiving that individual’s benefits claim; and the insurer may properly deny benefits if the individual does not appear as requested. (See Mapfre Ins. Co. of NY v Manoo, 140 AD3d 468, 469 [1st Dept 2016].) But Unitrin’s conclusion does not follow. Where a claimant (such as a medical provider) submits multiple claims for benefits, and the insurer’s EUO request is timely as to some of those claims and untimely as to others, the insurer is entitled to deny coverage only as to those claims for which it timely requested verification—not as to all claims. (See All of NY, 158 AD3d at 449-450.)

This court is not persuaded by Unitrin’s contrary argument. Unitrin contends that in Hertz Vehicles, LLC v Alluri (171 AD3d 432 [1st Dept 2019]), the insurer had submitted one claim for which there was an untimely EUO request and one claim for which there was a timely request, which (assertedly) led both Supreme Court and the First Department to hold that the insurer could deny all claims retroactive to the date of loss. This contention has two key shortcomings.

First, neither the trial nor appellate decisions in Alluri actually say that where an EUO request is timely only as to one out of two claims (and then not complied with), the insurer can properly deny benefits as to both claims. Instead, each decision refers only to one claim for benefits, for which the insurer’s EUO request had been timely under Manoo. (See Hertz Vehs. v Alluri, 2017 NY Slip Op 32578 [U], at *3-*4 [Sup Ct, NY County Dec. 11, 2017]; Alluri, 171 AD3d at 432.)

Second, if the First Department had held in Alluri that one timely EUO request entitles an insurer to deny benefits even as to claims for which an untimely request had been made, that holding would have been inconsistent with the Court’s ruling the year before in All of NY Yet Alluri does not discuss, or even mention, All of NY Rather, Alluri relies on Manoo (see 171 AD3d at 432); and the holding in Manoo is premised on the Court’s conclusion that the insurer had “establish[ed] that it timely and properly mailed the notices for EUOs” to the covered individual. (140 AD3d at 469.)

Unitrin also points to the First Department’s statement in Unitrin Advantage Ins. Co. v Bayshore Phys. Therapy, LLC that “when defendants’ assignors failed to appear for the requested [medical examinations], plaintiff had the right to deny all claims retroactively to the date of loss.” ((82 AD3d 559, 560 [1st Dept 2011] [emphasis added]). But even Bayshore itself notes [*4]that the insurer there met its burden to “establish[] that it requested [medical examinations] in accordance with the procedures and time-frames set forth in the No—Fault implementing regulations.” (Id.; see also American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 842 [1st Dept 2015] [emphasizing this point].) And it would be odd to say, in effect, that an insurer can still deny a benefits claim due to a claimant or assignor’s failure to appear at an EUO despite failing to timely or properly request the EUO after receiving that claim. Regardless, to the extent that a contradiction does exist between the First Department’s holdings in Bayshore and in All of NY, this court must follow the First Department’s most recent holding on the subject. (See Vaughan v Leon, 94 AD3d 646, 649 n 2 [1st Dept 2012].)

Unitrin’s EUO request upon receipt of the first claim was untimely. This court concludes, therefore, that Unitrin may not deny Dr. Dowd’s otherwise-sufficient claim for benefits from the first surgery based on Dowd’s failure to appear for an EUO.

That still leaves the claim for benefits from the second surgery. Under Manoo and Alluri, Unitrin’s EUO request was timely as to the second benefits claim—particularly since a key subject for questions at the EUO, namely the medical necessity of surgery on Quente Wright, would have been the same for both benefits claims. Dr. Dowd asserts, though, that the EUO request was improper: It did not sufficiently identify from whom Unitrin was seeking an EUO. This court disagrees. Unitrin has produced two EUO request letters that plainly request the appearance for an EUO of a principal from Dr. Dowd’s medical practice (i.e., either Dr. Dowd himself or someone with comparable authority), and also specify the subjects to be discussed at the EUO and the EUO’s time and place. Dr. Dowd does not contest that these letters were properly mailed. Nor does he contest that he failed to appear as requested. That is sufficient to establish that Dr. Dowd failed to comply with a requirement of the applicable no-fault insurance policy in this case as to his second claim for benefits.

Accordingly, it is hereby

ORDERED that the branch of Dr. Dowd’s motion under CPLR 3212 seeking summary judgment as to his claim for benefits in the amount of $5,943.59 (received by Unitrin on August 1, 2011) is denied; and it is further

ORDERED that the branch of Unitrin’s cross-motion under CPLR 3212 seeking summary judgment as to Dr. Dowd’s claim for benefits in the amount of $5,943.59 (received by Unitrin on August 1, 2011) is granted; and it is further

ADJUDGED AND DECREED that Unitrin owes no duty to pay Dr. Dowd that claim for benefits; and it is further

ORDERED that the branch of Dr. Dowd’s motion under CPLR 3212 seeking summary judgment as to his claim for benefits in the amount of in the amount of $6,106.56 (received by Unitrin on October 7, 2011) is granted; and it is further

ORDERED that the branch of Unitrin’s cross-motion under CPLR 3212 seeking [*5]summary judgment as to Dr. Dowd’s claim for benefits in the amount of $6,106.56 (received by Unitrin on October 7, 2011) is denied; and it is further

ADJUDGED AND DECREED that Dr. Dowd shall have judgment against Unitrin in the amount of $6,106.56; plus interest on that sum at 2% per month, running from November 6, 2012, until the entry of judgment; plus attorney fees as provided for under Insurance Law § 5106 (a) and 11 NYCRR § 65-4.6; and it is further

ORDERED that Dr. Dowd shall serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly; and it is further

ORDERED that notice of entry may be served by mail or overnight delivery service, with Dr. Dowd to e-file a copy of notice of entry (and accompanying affidavit(s) of service) on NYSCEF once filing of notices of entry in pending nonessential matters is again permitted by order of Chief Administrative Judge Lawrence Marks.

Date: 5/21/20

AMERICAN TRANSIT INSURANCE COMPANY, Plaintiff, against SKY LIMIT PHYSICAL THERAPY, P.C., et al., Defendants.

Index No. 156465/2018

Law Office of Peter C. Merani, P.C., New York, NY (Adam Waknine of counsel), for plaintiff.

Law Offices of Dino R. Dirienzo, Syosset, NY (Ralph C. Caio of counsel), for defendants MII Supply, LLC,. Dynamic Surgery Center, LLC, Comprehensive Medical Assist, P.C., and Citimed Services, P.A.

Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65 were read on this motion for SUMMARY JUDGMENT

In this motion, plaintiff American Transit Insurance Company requests a declaratory judgment that it is not required to pay no-fault benefits to the various medical-provider defendants. American Transit seeks summary judgment under CPLR 3212 against certain answering defendants and default judgment under CPLR 3215 against the remaining defendants. This motion, however, is not properly before this court, because American Transit’s action has already been dismissed. The motion is denied.

This action was dismissed in May 2019 under 22 NYCRR § 202.27 due to American Transit’s failure twice to appear at scheduled preliminary conferences. American Transit never moved to vacate that default dismissal. Indeed, American Transit’s papers on the present motion do not even acknowledge that this action was previously dismissed, much less seek to offer a reasonable excuse for American Transit’s default. This court is disinclined to deem this motion to be somehow an implicit request for vacatur of the dismissal of the action.

This court’s reluctance is only heightened by the fact that American Transit’s motion is not based on admissible evidence. American Transit claims that it has good reason to believe that the underlying automobile collision in this case was staged, and therefore not an insurable [*2]incident. (See Central Gen. Hosp. v Chubb Grp. of Ins. Cos., 90 NY2d 195, 199 [1997].) But the evidence that American Transit identifies as the basis for this conclusion is a summary report that is neither sworn nor notarized, as required for it to qualify as a non-hearsay affidavit. (See NYSCEF No. 50 at 2-7.) As a result, this court could not rely on the report as a basis to vacate the dismissal of the action. (See Harris v Krauss, 87 AD3d 469, 469 [1st Dept 2011] [reversing grant of motion to vacate under CPLR 5015, where moving papers relied on evidence in a putative affidavit that had not been properly notarized].)

Thus, even if this court were to construe the present motion liberally as an application to vacate this court’s prior dismissal of this action on default—and this court declines to do so— American Transit would still fail to establish its entitlement to relief.

Accordingly, it is hereby

ORDERED that American Transit’s motion is denied.

Date: 5/13/20

AMERICAN TRANSIT INSURANCE COMPANY, Plaintiff, against 21st CENTURY PHARMACY INC., et al., Defendants.

Index No. 159037/2018

Law Offices of Daniel J. Tucker, Brooklyn NY (Megan Harris of counsel), for plaintiff.

Law Offices of Gabriel & Shapiro LLC, Rockville Centre, NY (Joseph Padrucco of counsel), for defendant Janan S. Syed, DC.

Gerald Lebovits, J.

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiff American Transit Insurance Company. Nonparty Tynise Watson was a passenger in a vehicle that was allegedly involved in a collision. The vehicle was covered by a no-fault insurance policy issued by American Transit. Various medical providers applied for no-fault benefits as assignees of Watson, which American Transit denied.

In this action, American Transit seeks a declaratory judgment that it is not required to pay no-fault benefits to the various medical provider defendants. American Transit now moves for summary judgment under CPLR 3212 against defendant Janan S. Syed, DC, and moves for default judgment under CPLR 3215 against the properly served and non-appearing defendants [*2]who remain in the action.

American Transit’s motion for summary judgment and for default judgment is denied.

DISCUSSION

Both branches of American Transit’s motion rely on the same legal theory and supporting evidence. American Transit contends, in essence, that it has good reason to believe that the collision putatively giving rise to Watson’s need for medical treatment was staged, which is a proper ground for denying coverage.

A no-fault insurer seeking a declaration of no coverage based on a conclusion that the underlying collision was staged must establish as a “fact or founded belief that the alleged injury does not arise out of an insured incident.” (Central Gen. Hosp. v Chubb Grp. of Ins. Cos., 90 NY2d 195, 199 [1997].) Here, American Transit submits an affidavit from a claims investigator familiar with the case to support its conclusion that the collision was not genuine. That affidavit, however, is insufficient to meet American Transit’s burden. The affidavit’s account of the circumstances of the accident—and thus the various “red flag” indicators of a staged collision—it is based largely on inadmissible evidence, namely a police accident report and the unsigned transcript of Watson’s examination under oath (EUO).

A police accident report is admissible as a business record if, when prepared, it was based on the preparing officer’s personal observations at the scene, or if the information in the report came from an eyewitness with a business duty to report to the officer. (See Pena v. Slater, 100 AD3d 488, 489 [1st Dept 2012]; State Farm Mut. Auto Ins. Co. v Langan, 18 AD3d 860, 862 [2d Dept 2005].) Here, however, the police report states expressly that the preparing officer did not witness the underlying collision at issue (see NYSCEF No. 13, at 3); indeed, the report appears to indicate that the officer was not present at the scene at the time she investigated the circumstances of the collision (see id. at 1). Nor does American Transit attempt to establish that the occupants of the vehicle (the presumptive sources of the information in the report) were under a business duty to report to the investigating officer. The police report here is thus inadmissible for the hearsay purpose for which American Transit seeks to use it: establishing as fact the circumstances under which the alleged collision occurred. (See Jupa v Zaidi, 309 AD2d 606, 607 [1st Dept 2003]; accord Langan, 18 AD3d at 862.)

The affidavit of American Transit’s investigator also draws heavily on Watson’s EUO transcript. But that transcript is not signed or notarized. (See NYSCEF No. 14 at 76.) And although the transcript itself suggests that American Transit intended to send a copy of the transcript to Watson to review, sign, notarize, and return (see id.), American Transit has not met its burden to establish that it actually followed through and provided Watson the transcript, as required by CPLR 3116 (a). (See Ramirez v Willow Ridge Country Club, 84 AD3d 452, 453 [1st Dept 2011] [noting that the proponent of a deposition transcript bears the burden to show compliance with CPLR 3116 (a)].) On this record, therefore, the transcript is inadmissible hearsay as well. (See Santos v. Intown Assocs., 17 AD3d 564, 565 [2d Dept 2005].)

As hearsay, neither the police report nor the EUO transcript in this case are competent evidence to support American Transit’s motion for summary judgment. (See Jupa, 309 AD2d at 607; Santos, 17 AD3d at 565.) Nor can American Transit rely upon them to support a motion for default judgment. (See Martinez v Reiner, 104 AD3d 477, 478 [1st Dept 2013]; Zelnik v Bidermann Indus. U.S.A., Inc., 242 AD2d 227, 228 [1st Dept 1997].)

Excluding facts gleaned from the police report and Watson’s EUO transcript, the affidavit of American Transit’s investigator is based on little more than the day, time, and location of the collision. But those facts, standing alone, are not sufficient to establish a founded belief that the collision was staged—either on a prima facie basis for purposes of default judgment, or as a matter of law for purposes of summary judgment.

Accordingly, it is hereby

ORDERED that the branch of American Transit’s motion seeking summary judgment under CPLR 3212 against defendant Janan S. Syed, DC, is denied; and it is further

ORDERED that the branch of American Transit’s motion seeking default judgment under CPLR 3215 against the remaining properly served and non-appearing defendants is denied; and it is further

ORDERED that the parties shall confer and shall prepare a joint request for a preliminary conference with this court, as set forth in the Remote Conference Protocol available on this court’s website, http://ww2.nycourts.gov/courts/1jd/supctmanh/index.shtml.

Date: 5/07/20

Liberty Mutual Insurance Company and LM General Insurance Company, Plaintiffs, against Trevohn Martin et al., Defendants.

654605/2019

Burke, Conway & Stiefeld, White Plains, NY (Michelle Dunleavy of counsel), for plaintiffs.

The Rybak Firm, PLLC, Brooklyn, NY (Oleg Rybak of counsel), for defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC.

Kopelevich & Feldsherova, P.C., Brooklyn, NY (David Landfair of counsel), for defendant M & M Supplies Group, Inc.

Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53, 54 were read on this motion to/for DEFAULT JUDGMENT

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiffs Liberty Mutual Insurance Company and LM General Insurance Company (Liberty Mutual). Defendants Trevohn Martin, Dwayne Bailey, and Damell Jackson were in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by Liberty Mutual. Martin, Bailey, and Jackson (and various medical providers acting as their assignees) applied for no-fault benefits, which Liberty Mutual denied.

In this action, Liberty Mutual is seeking a declaratory judgment that it is not required to pay no-fault benefits to Martin, Bailey, Jackson, or the various medical provider defendants. Liberty Mutual now moves for a default judgment under CPLR 3215 (and other related relief) against defendants. Defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, and defendant M & M Supplies Group, Inc., separately cross-move under CPLR 3012 (d) to extend defendants’ time to answer, and to compel acceptance of defendant’s late answer, respectively.

Liberty Mutual’s motion for default judgment is denied; defendants’ cross-motions are [*2]granted.

DISCUSSION

I. Liberty Mutual’s Motion for Default Judgment

To obtain a default judgment, a plaintiff must among other things submit nonhearsay proof of all the facts necessary to establish its prima facie entitlement to relief. (See CPLR 3215 [f]; Joosten v Gale, 129 AD2d 531, 535 [1st Dept 1987]; Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999].) This court concludes that Liberty Mutual has not met that burden here.

Liberty Mutual’s request for declaratory relief rests on two different grounds. As to defendant Jackson (and his medical-provider assignees), Liberty Mutual contends that he failed to appear for a properly scheduled examination under oath (EUO), thereby breaching a condition precedent to coverage. As to defendants Martin and Bailey (and their medical-provider assignees), Liberty Mutual contends, in essence, that it has good reason to believe that Martin and Bailey helped stage the collision that putatively gave rise to their need for medical treatment, which is a proper ground for denying coverage.

A. Liberty Mutual’s Denial of Coverage as to Defendant Jackson and His Assignees

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) Liberty Mutual has not satisfied that requirement here. Among other things, § 65-3.5 provides that once an insurer receives a claim for benefits, the insurer has 10 business days to provide the claimant with the forms necessary to verify the claim. (See 11 NYCRR § 65-3.5 [a].) Once the insurer receives the completed verification forms, it then has 15 business days to seek further verification, for example through requesting a claimant to appear for an EUO. (See id. § 65-3.5 [b].) A claimant’s failure without reasonable cause to appear for a properly scheduled EUO is grounds to deny coverage.

As to Jackson, Liberty Mutual has not submitted evidence establishing when it first received a claim for benefits from him or from one of his treating providers, when it provided the necessary verification forms, or when it first received one of those forms back. Absent this evidence, Liberty Mutual cannot show that it timely complied with the procedural requirements of § 65-3.5. At most, Liberty Mutual submits an affidavit of a claims manager, stating in relevant part that based on her knowledge of Liberty Mutual’s procedures and review of Jackson’s claim file, “[a]ll verification requests and denials were timely mailed.”^[FN1] This brief and conclusory statement is not sufficient.

Additionally, Liberty Mutual fails to show that Jackson was properly notified of the scheduled EUOs. Liberty Mutual submits copies of two scheduling letters together with affidavits of service attesting to their mailing. Neither affidavit, however, is signed or dated; and the notarization blank on each affidavit is not filled in. (See NYSCEF No. 11 at 4, 8.) The [*3]affidavits, therefore, are defective.^[FN2] They cannot establish that the scheduling letters were properly mailed. (See Levine v Health First, 147 AD3d 1193, 1195 [3d Dept 2017].) Nor does Liberty Mutual provide any other evidence (in affidavit form or otherwise) that might remedy this deficiency.

Liberty Mutual thus has failed on this motion to provide facts establish a prima facie case that defendant Jackson failed to appear for timely and properly scheduled EUOs, as required to support Liberty Mutual’s request for a declaration of no coverage. Liberty Mutual’s motion for default judgment against Jackson and his assignees is denied.

B. Liberty Mutual’s Denial of Coverage as to Defendants Martin and Bailey and Their Assignees

A no-fault insurer seeking a declaration of no coverage on default based on a conclusion that the underlying collision was staged must establish prima facie the “fact or founded belief that the alleged injury does not arise out of an insured incident.” (Central Gen. Hosp. v Chubb Grp. of Ins. Cos., 90 NY2d 195, 199 [1997].)

Here, Liberty Mutual submits an affidavit from a claims investigator familiar with the case to support its conclusion that the collision was not genuine. That affidavit, in turn, relies heavily on the transcripts from the EUOs of Martin and Bailey. But Liberty Mutual fails to show that those transcripts are admissible. In particular, the transcripts are not signed; and Liberty Mutual does not attempt to establish that it ever provided them to Martin and Bailey to review and sign, as required by CPLR 3116 (a). (See Ramirez v Willow Ridge Country Club, 84 AD3d 452, 453 [1st Dept 2011] [noting that the proponent of a deposition transcript bears the burden to show compliance with CPLR 3116 (a)].)

At least for purposes of this motion, therefore, key portions of the affidavit of Liberty Mutual’s claims investigator are based only on hearsay, and are thus insufficient to support the entry of a default judgment. (See Martinez v Reiner, 104 AD3d 477, 478 [1st Dept 2013]; Zelnik v Bidermann Indus. U.S.A., Inc., 242 AD2d 227, 228 [1st Dept 1997].) The claim by Liberty Mutual’s claims investigator in her affidavit that “the facts and circumstances surrounding the accident are indicative of no-fault fraud patterns, specifically a staged accident” is merely conclusory. To be sure, the affidavit does state that Martin and Bailey had previously been in similar accidents together before, which might be probative on the question of whether the collision here was fake. But the affidavit neither provides any details to support this statement nor identifies the basis of this statement beyond it having been “revealed” by an “investigation.”

On this record, therefore, Liberty Mutual has not established prima facie a founded belief that Martin and Bailey were engaged in no-fault insurance fraud rather than being genuine victims of a car accident. Liberty Mutual’s motion for default judgment against Martin and Bailey (and their respective assignees) is denied.

II. Defendants’ Cross-Motions Regarding Their Answers

In addition to opposing Liberty Mutual’s default-judgment motion, defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, and defendant M & M Supplies Group, Inc., separately cross-move under CPLR 3012 (d) to, in [*4]effect, permit them to answer Liberty Mutual’s complaint. The cross-motions are granted.

The moving defendants’ cross-motions are based on CPLR 317, which permits a defendant to appear and defend the action if “he did not personally receive notice of the summons in time to defend and has a meritorious defense.” These defendants provide affidavits attesting to their lack of receipt of Liberty Mutual’s summons and complaint. For the reasons described above, the moving defendants have a potentially meritorious defense. And although the question is a close one in the circumstances of this case, this court concludes that moving defendants’ affidavits sufficiently establish that they did not personally receive timely notice of the summons.

Accordingly, it is hereby

ORDERED that Liberty Mutual’s motion for default judgment under CPLR 3215 is denied; and it is further

ORDERED that the cross-motion of defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, under CPLR 3012 (d) to extend their time to answer is granted nunc pro tunc, and the answer dated December 6, 2019 is deemed timely served and filed; and it is further

ORDERED that the cross-motion of defendant M & M Supplies Group, Inc., under CPLR 3012 (d) to compel Liberty Mutual to accept its proposed answer dated January 6, 2020, is granted.

Dated: May 4, 2020

Hon. Gerald Lebovits, J.S.C.

Footnotes

Footnote 1:Liberty Mutual’s reply affirmation also attaches what appears to be an NF-3 verification form from one of Jackson’s treating providers. But the affirmation does not offer any information or representations to authenticate the attached verification form. Nor does the affirmation indicate whether this was the first verification form received back by Liberty Mutual.

Footnote 2:By contrast, the affidavit of additional mailing in support of Liberty Mutual’s motion for default judgment—completed by the same person who prepared the affidavits of service for the the EUO scheduling letters—is properly signed, dated, and notarized. (See NYSCEF No. 8 at 2.)

AMERICAN TRANSIT INSURANCE COMPANY, Plaintiff, against ALBERT HAYES, THE BROOKDALE HOSPITAL MEDICAL CENTER d/b/a BROOK DALE HOSPITAL, CITIMEDICAL I, PLLC, DOS MANOS CHIROPRACTIC, P.C., EASY ACCESS CHIROPRACTICE, P.C., EMIS CHIROPRACTIC, P.S., JULES FRANCOIS PARISIEN, MD, LIFE REHAB PT, P.C., LONGEVITY MEDICAL SUPPLY, INC., MEDIGNA INC., MMA PHYSICAL THERAPY, P.C., NGM ACUPUNCTURE, P.C., NYC COMMUNITY MEDICAL CARE P.C., REHAB CARE PHYSICAL THERAPY P.C., RF CHIROPRACTIC IMAGING, P.C., Defendants.

Index No. 150643/2019

The Law Office of Daniel J. Tucker, Brooklyn, NY (R. Jacob Lamar of counsel), for plaintiff.

Zara Javakov, Esq., P.C., Brooklyn, NY (Victoria Tarasova of counsel), for defendants Dos Manos Chiropractic, P.C., Jules Francois Parisien, M.D., and Medigna Inc.

Gerald Lebovits, J.

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiff American Transit Insurance Company. Defendant Albert Hayes was a passenger in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy [*2]issued by American Transit. Hayes applied for no-fault benefits, which American Transit denied.

In this action, American Transit seeks a declaratory judgment that it is not required to pay no-fault benefits to Hayes or to the other defendants (medical providers acting as Hayes’s assignees). American Transit now moves for summary judgment on this claim under CPLR 3212 as against those defendants who have appeared in the action, and moves for default judgment under CPLR 3215 as against the remaining, non-appearing defendants. The motion is denied.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR § 65-3.5, governing the handling of no-fault claims. (See American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) American Transit has not satisfied that requirement here. Among other things, § 65-3.5 provides that once an insurer receives a claim for benefits, the insurer has 10 business days to provide the claimant with the forms that it requires for verification of the claim. (See 11 NYCRR § 65-3.5 [a].) Once the insurer receives the completed verification forms, it then has 15 business days to request further verification, such as an independent medical examination. (See id. § 65-3.5 [b].)

Here, the record reflects that American Transit received an NF-2 benefits claim form from Hayes at the end of April 2018. And the record reflects that American Transit requested in late July 2018 that Hayes appear for an independent medical examination. Yet there is nothing in the record (whether in the form of an affidavit or documentary evidence) that might establish when American Transit sent the necessary verification forms to Hayes, or when American Transit received the completed verification forms back from Hayes. Absent that information, American Transit has failed to satisfy all of the elements of its claim for declaratory relief.

American Transit thus is not entitled to summary judgment under CPLR 3212 against the answering defendants. Similarly, to obtain a default judgment against the non-appearing defendants American Transit is required to provide proof (such as an affidavit) of all the facts necessary to establish its prima facie entitlement to relief. (See CPLR 3215 [f]; Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999].) American Transit has not met that requirement here, and thus is not entitled to default judgment, either.

Accordingly, it is hereby

ORDERED that the branch of American Transit’s motion seeking summary judgment under CPLR 3212 against the answering defendants is denied; and it is further

ORDERED that the branch of American Transit’s motion seeking default judgment under CPLR 3215 against the non-appearing defendants is denied.

Date: 4/14/20

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.

(April 4, 2012 supplemental pre-trial report at 1.) As noted above, it is undisputed that it was not until March 1, 2013, that Belford emailed a copy of the summons and complaint to Buchman, who then forwarded Belford’s email to Dunstan. Further, it should be noted that although Buchman’s April 4, 2012 supplemental pre-trial report indicates that, “according to conversations with John Belford of the Attorney General’s Office,” the action that the State “is commencing . . . against P.S. Bruckel” is for “contractual indemnification,” the copy of the complaint that the moving and opposing parties do not appear to dispute was ultimately provided to Buchman by Belford on March 1, 2013 and that Buchman then forwarded to Dunstan also alleges causes of action for non-contractual indemnification and contribution and for “breach of contract in failing to purchase insurance for the protection of the State of New York . . .” (see Exhibit A to Evanston’s complaint in the current action). In any event, the State has offered no explanation for the failure earlier to respond to Buchman’s and Dunstan’s requests for copies of the pleadings in the State’s action against Bruckel — even after Dunstan informed Belford that “she was unable to find them herself” — which evidently was not commenced through the courts’ electronic filing system and had not advanced to the stage at which a “non-e-filed” action or proceeding can be identified through a search of the New York State Unified Court System’s “E-Courts” online case information service, asserting, as discussed infra (see footnote 14 and accompanying text), privilege when Belford was asked why he did not earlier provide copies of the pleadings to Dunstan. Nor, for that matter, has Evanston offered any explanation for its not having reached out to Bruckel, prior to its receipt of the State’s pleadings from Belford via Buchman, to determine if Bruckel had in fact been served and, if so, to obtain copies of the pleadings from it, particularly after it was made aware of the State’s contention that the action had been commenced and that Bruckel had defaulted in appearing in the State’s action against it.

Footnote 14: When asked at his deposition “if there was any reason” or “different reasons or the same reason” for not providing a copy of the State’s complaint in the Bruckel action to Dunstan earlier despite her having asked him for it “on multiple occasions” and his having “told her that [he] would,” Belford was instructed not to answer “on the basis of privilege.” (See transcript citations in accompanying text). The parties have not addressed the propriety, vel non, of that assertion and the court draws no inference from it in connection with the current motion.

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.

(Buchman Dep., tr. at 151; see also id., at 149-50.) As Buchman explained, he believed that the $1 million limit of the OCP policy would be inadequate to settle the Staveski action (id. at 139; April 2, 2012 Pre-Trial Report at 5), and he was “trying to get my client, the state, more coverage” (Buchman Dep., tr. at 149):

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?”

(Id. at 141).

Footnote 16: On the current motion and cross-motion, the parties have directed essentially all of their attention to the temporal effectiveness, vel non, of Evanston’s disclaimer of coverage; none has addressed in more than passing the coverage exclusions that were invoked in the March 15, 2013 disclaimer letter.

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).

B.Z. Chiropractic, P.C., Petitioner, against Allstate Insurance Company, Respondent.

719878/2018

Appearances of Counsel:
Attorney for Petitioner
Amos Weinberg, Esq.
Somerset Drive South
Great Neck NY 11020-1821
(516) 829-3900

Attorney for Respondent
Adam Waknine, Esq.
Peter c. Merani, PC.
1001 Avenue of the Americas, Suite 1800
New York, N.Y. 10018
(212) 629-9690

Laurence L. Love, J.

The following papers numbered EF 1-22 read on this petition by B.Z. Chiropractic, P.C., seeking a declaratory judgment to turn over monies from its bank account maintained outside of New York State with Bank of America, N.A. in such sum as is sufficient to satisfy the judgment, and determining that the judgment has and continues to accrue interest pursuant to the Insurance Department Regulations in effect at the time of the subject accident involving plaintiff’s assignor, in accordance with prior case law, at the rate of 2% per month compounded and Respondent’s Cross-Petition, seeking dismissal of this action based upon the doctrines of res judicata and collateral estoppel and sanctions for the filing of an allegedly frivolous action.

Papers Numbered

Notice of Petition, Petition, Exhibits EF 1-9

Notice of Cross-Petition, Petition, Exhibits EF 10-21

Affirmations in Opposition, Exhibits EF 22

Upon the foregoing papers, it is ordered that this petition and cross-petition are determined as follows:

The instant action arises out of an action filed in the Civil Court of the City of New York, Queens County, entitled B.Z. Chiropractic, P.C. a/a/o Tony Dance v. Allstate Insurance Company, Index No. 70935/00, which sought to recover first party No-Fault benefits for services rendered to defendant’s insured by plaintiff. Plaintiff was granted summary judgment in that action and on November 15, 2001, the Clerk of the Court entered judgment in favor of the plaintiff in the amount of $8,847.49. Plaintiff did not attempt to enforce said judgment until 2015, at which time defendant moved for a protective order and modification of the judgment pursuant to CPLR 5240. At that time, the amount of the judgment had grown to $227,060.57 ($8,847.49 plus 2% per month interest, compounded from November 15, 2001 through August 11, 2015). In an Order, dated November 16, 2015, the Civil Court found that plaintiff unreasonably allowed the compound interest to accrue and stayed said interest for the period of November 1, 2005 through June 19, 2015, the date that defendant received the plaintiff’s collections letter. Respondent issued checks in the amount of $22,999.70 in accordance with that decision and sought a satisfaction of judgment, moving by Order to Show Cause to compel same. Said motion was granted on July 7, 2016. Plaintiff appealed and on August 18, 2017, the Appellate Term, consolidated both appeals and reversed the lower court’s decision, finding that contrary to defendant’s assertions, plaintiff did not prevent defendant from timely paying the judgment. The Appellate Term added in an advisory capacity that the postjudgment rate of interest should be calculated pursuant to CPLR 5004 and not at the 2% per month rate provided for in 11 NYCRR 65-3.9(a). Thereafter, B.Z. Chiropractic moved before the Appellate Term seeking clarification of said decision or, in the alternative, for leave to appeal to the Appellate Division. The Appellate Term clarified that it was the Court’s intention to note that interest be awarded at the rate of 9% per year as in CPLR 5004, but that same is advisory and not appealable as of right or by permission.

The portion of Petitioner’s Petition seeking to turn over monies from its bank account maintained outside of New York State with Bank of America, N.A. in such sum as is sufficient to satisfy the judgment is denied in its entirety as Bank of America, N.A. is not a party to this action as required by CPLR §5225(b).

The portion of Petitioner’s Petition seeking a declaratory judgment on the proper interest rate which accrues on first party no-fault benefits after the entry of judgment is decided as follows: Pursuant to CPLR §5004, interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute. Pursuant to 11 NYCRR 65-3.9(a), All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month. At the time that the underlying claims were filed, said interest accrued at a compound rate. It is well settled that “with respect to interest on first party benefits due under the no-fault statute,…the Insurance Law supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004 (Gov’t Emp. Ins. Co. v. Lombino, 57 AD2d 957, 959, 394 N.Y.S.2d 898 [1977]) The policies of encouraging prompt payment of claims and reducing litigation outweigh limits on [*2]interest found elsewhere, See, Matter of McKenna v County of Nassau, Off. of County Attorney, 97 AD2d 440 (2d Dept 1983). The interest rate on No-Fault actions is intentionally punitive, with severe penalties in order to encourage prompt adjustment of claims. As such, the rate of interest is not reduced simply because the claim has been reduced to a judgment. While such claims remain overdue, they accrue interest at two percent per month. As such, plaintiff is entitled to a declaratory judgment recognizing same.

Respondent’s cross-petition seeking dismissal and sanctions for the filing of a frivolous action is denied in its entirety for the reasons above.

Dated: 2/25/2019
_________________________
Laurence L. Love, J.S.C.