Opinion
21987/09.
January 4, 2010.
Upon the foregoing papers, plaintiff's motion for summary judgment and defendant Old Republic Title Insurance Co.'s cross-motion for similar relief pursuant to CPLR 3212 are determined as follows:
This action was commenced by plaintiff All State Properties, Inc. (All State) against Old Republic Title Insurance Co. (Old Republic) and Madison Title Agency, Inc. (Madison) * for damages resulting from having to defend against a claim of ownership of residential property by the person then in possession, Dominic LaMonica, after it purchased that property with concomitant title insurance.
Plaintiff purchased the premises by deed dated September 15, 2004 from seller Terry Galgano. A title search revealed, among several, an earlier conveyance of the property on January 28, 2002 from Dominic LaMonica to Anthony Augello and Michael O'Sullivan as tenants in common. According to the title report, title had resided in six LaMonica siblings who had inherited the property from their mother. On June 18, 2002, five months after Mr. LaMonica allegedly conveyed his 1/6 interest, the other siblings and/or their issue conveyed the remaining interest to plaintiff's predecessor in interest, Terry Galgano.
A couple of months after the purchase when plaintiff commenced a holdover proceeding in District Court to have Mr. LaMonica evicted, Dominic LaMonica in his answer dated December 28, 2004, asserted that he never transferred or conveyed his interest in the property and that the signature on the deed was a forgery.
According to the affidavit of David Ney, a witness on plaintiff's behalf in prior litigation under Supreme Court Index Number 3995/05, in addition to the affirmation of Samuel Glass, Esq. dated June 9, 2005 made in support of plaintiff's prior motion for default and summary judgment, Old Republic was notified by letter dated February 16, 2005 that a claim against the property had been asserted, which plaintiff learned about upon receiving Mr. LaMonica's answer.
This letter from plaintiff's attorney, allegedly sent by certified mail return receipt requested to Old Republic's home office in Minnesota, "demanded" written confirmation of coverage within 7 days and assurance that Old Republic would take all necessary action to clear title.
In the action at bar plaintiff maintains it was "compelled" to commence the prior action on March 16, 2005 for partition and to quiet title against Mr. LaMonica as well as Old Republic and others by its own attorney. Plaintiff ultimately prevailed against Mr. LaMonica in the prior action and the conveyances were deemed valid.
In its summary judgment motion at bar, plaintiff has submitted sufficient evidence to support its prima facie entitlement to damages as a matter of law. In opposition, however, not only does Old Republic raise several issues requiring the denial of plaintiff's motion outright, it also demonstrates by cross-motion its own entitlement to summary judgment in the first instance as a matter of law.
Initially, however, any assertion that collateral estoppel applies to the instant action because the Court in its amended decision dated October 12, 2005 under Index Number 3995/05 dismissed the action against Old Republic as "premature" is in error. The undersigned found the action premature since the validity of the deed with respect to Mr. LaMonica's claim had yet to be determined vis-a-vis the indemnity issue.
The Court never reached the merits of Old Republic's defenses in the prior action. Consequently, the complaint herein may not be dismissed under that doctrine (see generally In re Hunter, 4 NY3d 260). Old Republic by affidavit of its Vice President and Senior Claims Counsel in attaching the affidavit of former Claims Counsel C. Michael Brady dated July 21, 2005, part of the record under Index Number 3995/05 in opposition to plaintiff's prior motion for summary judgment, submits that Mr. Glass's so-called demand letter dated February 16, 2005 is stamped as received on March 1, 2005.
In response to plaintiff's claim contained in the correspondence, on March 4, 2005 Mr. Brady wrote to Mr. Glass that a claims number had been provided and he (Brady) was assigned to administer the claim.
In addition, Mr. Brady spoke to and followed up with a letter dated March 25, 2005 to Mr. Stanley Goldberg, Esq., the attorney who initially represented Terry Galgano, seeking the file as part of the investigation into plaintiff's claim.
It was then Mr. Brady learned that plaintiff, without notice, authority or consent commenced the prior lawsuit on March 16, 2005, just 15 days after receiving Mr. Glass's letter and 12 days after his response was mailed.
The Court determines that even in viewing the evidence in the light most favorable to plaintiff, February 16 to March 16 is only one month, an insufficient amount of time as a matter of law to investigate the claim in this complex case involving forgery with a view toward prosecuting any action on plaintiff's behalf.
As plaintiff was aware from the underlying action, Mr. LaMonica was difficult to contact and lived in the house as an apparent recluse.
The Owner's Policy of Title sections 4 (a) (b) and (d) reserve Old Republic's right to prosecute on behalf of or act to prevent loss to its insured or select counsel of its own choice. Consequently, defendant cross-moves for dismissal asserting plaintiff, in violating a material aspect of the contract, voided the policy.
Plaintiff admits to learning of Mr. LaMonica's claim on or about December 28, 2004 yet allegedly it did not notify defendant in writing, as required, until 7 weeks later.
As for plaintiff's newly asserted claim that defendant Old Republic had been notified orally of Mr. LaMonica's claim of 1/6 interest in the property as early as the closing date, this does not absolve plaintiff from establishing a formal claim by first notifying the insurance company in writing in accordance with the policy.
In any event, Schedule B (c) of the Title Policy states that the company will not pay for any loss, damages, attorney's fees, etc. due to adverse claims or defects "suffered" by the insured or known to the insured and not disclosed in writing.
In opposition to Old Republic's cross-motion for summary judgment, plaintiff does not provide the Court with a copy of the return receipt for the certified mail allegedly sent February 16, 2005. In addition, plaintiff does not deny that it received Mr. Brady's letter dated March 4, 2005. On a motion for summary judgment, both parties have an obligation to produce all the evidence within its knowledge or possession ( Five Boro Electric Contractors Association v. City of New York, 37 AD2d 676). Since plaintiff has not produced the receipt or denied receiving the letter, the undersigned may consider that to be an admission.
Moreover, when the ultimate issues to be determined concerns whether plaintiff was "compelled" to commence the prior Supreme Court action because, upon notification, defendant Old Republic was not diligent in prosecuting any action on its behalf (see policy paragraph 4. (b) conditions and stipulations) or was plaintiff's precipitous commencement of the prior action against Old Republic a failure to cooperate with the insurer ( Id., at 4. (d)), thus terminating any indemnity liability or obligation to defend or prosecute under the contract, the Court is permitted to search the record for assistance in making a ruling. The Court has reviewed all papers under co-defendant Madison's motions which purportedly have been withdrawn and which include evidence submitted in the prior lawsuit.
The Court determines that plaintiff's motion for summary judgment is denied upon the evidence presented by defendant Old Republic raising questions of fact that, under any of the factual sanarios raised by plaintiff, defendant did not act unreasonably or without diligence in prosecuting the underlying adverse claim of Mr. LaMonica (Seq. #002).
The newly-asserted contention by All State, a limited liability corporation formed to purchase, rehabilitate and sell properties, that a policy was never issued consequently it did not know notice had to be in writing, fails to raise a genuine issue of fact.
As for defendant Old Republic's cross-motion to dismiss the complaint, the evidence as viewed in the light most favorable to plaintiff demonstrates, as a matter of law, that in commencing the prior action by its own attorney against Old Republic without allowing for a reasonable amount of time for defendant to diligently commence a lawsuit against Dominic LaMonica and others after a good faith investigation, defendant was placed in an adversarial posture. Consequently, all cooperation on plaintiff's part ceased upon filing an action against its insurer. Since cooperation is a condition precedent to coverage and thus a material aspect of the policy as a matter of law, plaintiff cannot now complain that defendant failed in its obligations set forth in the contract (see Empire Mutual v. Strond, 36 NY2d 719).
Since plaintiff has failed to raise genuine material issues of fact supported by admissible evidence in opposition to the cross-motion that defendant was obligated to plaintiff to prosecute any action against Dominic LaMonica, Old Republic's cross-motion is granted (Seq. #004).
Motion sequence numbers 001 and 003 (the Madison motions) shall be entered denied as moot.
The complaint against defendant Old Republic is dismissed and the entire action is disposed.