Opinion
Index No. CV-705020-19/QU
11-30-2021
CHIROPRACTIC EXAM WORKS, P.C., Plaintiff(s), v. SENTRY CASUALTY COMPANY, Respondent(s).
Plaintiff's counsel: Sanders Grossman Aranova, PLLC, 100 Garden State Plaza, Suite 500, Garden City, NY 11530 Defendant's counsel: Gallo Vitucci Klar, LLP, 90 Broad Street, 3d Floor, New York, NY 10004
Plaintiff's counsel: Sanders Grossman Aranova, PLLC, 100 Garden State Plaza, Suite 500, Garden City, NY 11530
Defendant's counsel: Gallo Vitucci Klar, LLP, 90 Broad Street, 3d Floor, New York, NY 10004
Wendy Changyong Li, J.
I. Papers
The following papers were read on Defendant's motion for summary judgment dismissing Plaintiff's complaint:
Papers Numbered
Defendant's Notice of Motion and Affirmation in Support dated January 30, 2020 ("Motion") and file stamped by the court on January 31, 2020. 1
Plaintiff's Affirmation in Opposition to Defendant's Motion dated March 22, 2021 ("Opposition") and electronically filed with the court on April 28, 2021. 2
Defendant's Reply Affirmation dated August 23, 2021 ("Reply") and electronically filed with the court on the same date. 3
II. Background
In a summons and complaint filed on March 12, 2019, Plaintiff sued Defendant insurance company to recover $454.55 in unpaid first party No-Fault benefits for medical services provided to Plaintiff's assignor Etienne, plus attorneys’ fees and statutory interest (see Motion, Aff. of Weber, Ex. A). Defendant moved for summary judgment dismissing Plaintiff's complaint on the ground that Etienne made material misrepresentations on his insurance application and failed to attend scheduled Examinations Under Oath ("EUO"). Plaintiff opposed Defendant's motion for summary judgment. An oral argument by both parties was conducted by this Court on November 8, 2021.
III. Discussion and Decision
CPLR 3212 provides that "a motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions" ( CPLR 3212[b] ). "Mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" ( Zuckerman v. City of New York , 49 NY2d 557, 562 [1980] ). "A defendant moving for summary judgment [seeking an order dismissing plaintiff's complaint] has the initial burden of coming forward with admissible evidence, such as affidavits by persons having knowledge of the facts, reciting the material facts and showing that the cause of action has no merit" ( GTF Mktg. v Colonial Aluminum Sales , 66 NY2d 965, 967 [1985] ; Anghel v Ruskin Moscou Faltischek, P.C. , 190 AD3d 906, 907 [2d Dept 2021], see Jacobsen v. New York City Health & Hosps. Corp. , 22 NY3d 824, 833 [2014] ). A motion for summary judgment "shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party" ( CPLR 3212[b] ; Zuckerman v. City of New York , at 562, see GTF Mktg. v Colonial Aluminum Sales , 66 NY2d at 968 ).
Insurers must pay or deny No-Fault benefit claims "within thirty (30) calendar days after receipt of the proof of the claim" ( Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co. , 25 NY3d 498, 501 [2015] ; Fair Price Med. Supply Corp. v Travelers Indem. Co. , 10 NY3d 556, 563 [2008] ; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co. , 9 NY3d 312, 317 [2007] ; see Insurance Law § 5106[a] ; 11 NYCRR § 65-3.8 [c]; Presbyterian Hosp. in City of NY v Maryland Cas. Co. , 90 NY2d 274, 278 [1997] ). Failure to establish timely payment or denial of the claim precludes the insurer from offering evidence of its defense to non-payment ( Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co. , 25 NY3d at 506 ; Fair Price Med. Supply Corp. v. Travelers Indem. Co. , 10 NY3d at 563 ; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co. , 9 NY3d at 318 ; Presbyterian Hosp. in City of NY v Maryland Cas. Co. , 90 NY2d at 281-86 ).
A. Material Misrepresentation
Defendant may deny no-fault benefits to Plaintiff based on Etienne's fraudulent procurement of the insurance ( Matter of Insurance Co. of Am. v Kaplun , 274 AD2d 293, 298-99 [2d Dept 2000] ; Renelique v National Liab. & Fire Ins. Co. , 50 Misc 3d 144[A], 2016 NY Slip Op 50254[U] * 1 [App Term 2d Dept 2016]; Jamaica Dedicated Med. Care, P.C. v Praetorian Ins. Co. , 47 Misc 3d 147[A], 2015 NY Slip Op 50756[U] * 1 [App Term 2d Dept 2015]; W.H.O. Acupuncture, P.C. v Infinity Prop. & Cas. Co. , 36 Misc 3d 4, 6 [App Term 2d Dept 2012] ; New Millennium Psychological Servs., P.C. v Commerce Ins. Co. , 34 Misc 3d 127[A]; 2011 NY Slip Op 52286[U] *1).
No misrepresentation shall avoid any contract of insurance or defeat recovery thereunder unless such misrepresentation was material. No misrepresentation shall be deemed material unless knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make such contract.
( Insurance Law § 3105[b][1] ; Ambac Assur. Corp. v Countrywide Home Loans, Inc. , 31 NY3d 569, 580 [2018] ). Therefore, a material misrepresentation exists when the insurer knowing of the misrepresented fact would not have issued the policy ( Piller v. Ostego Mut. Fire Ins. Co. , 164 AD3d 534, 536 [2d Dept 2018] ; Caldara v Utica Mut. Ins. Co. , 130 AD3d 665, 665 [2d Dept 2015] ; Morales v Castlepoint Ins. Co. , 125 AD3d 947, 948 [2d Dept 2015] ; Lema v Tower Ins. Co. of NY , 119 AD3d 657, 657 [2d Dept 2014] ). Misrepresentation of an insured's address to procure automobile insurance is material (see Williams v Janvier , 176 AD3d 1139, 1142 [2d Dept 2019] ).
In our instant case, Defendant claimed that Etienne indicated on his insurance application that he resided in Connecticut and that the insured vehicle would be garaged there, while he actually resided and garaged the vehicle in New York to take advantage of lower insurance costs in Connecticut. To support its Motion, Defendant relied on various documents presented through an affidavit dated January 29, 2020, in which Gilreath, Defendant's Senior Claims Specialist, attested that her affidavit was based on "a review of the file contents kept in the ordinary course of business and the company wide computer system ..." (Motion, Weber Aff., Ex C at 1).
Defendant relied on Etienne's insurance application in which he listed a Connecticut address and averred that the statements therein were true. However, Gilreath did not attest that she observed Etienne sign the insurance application or that she otherwise had personal knowledge of its execution, so failed to authenticate the insurance application ( Andreyeva v Haym Solomon Home for the Aged, LLC , 190 AD3d 801, 802 [2d Dept 2021] ; Antoine v Kalandrishvili , 150 AD3d 941, 942 [2d Dept 2017], see Hefter v Elderserve Health, Inc. , 134 AD3d 673, 675 [2d Dept 2015] ). Nor did Gilreath provide a foundation for the insurance application as a business record, which requires that "it was made in the regular course of business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter" ( CPLR 4518[a], see All Borough Group Med. Supply, Inc. v GEICO Ins. Co. , 43 Misc 3d 27, 29 [App Term 2d Dept 2013] ). Here, Gilreath did not attest to her personal familiarity with Defendant's record-keeping procedures and practices, so failed to establish a business record exception to the hearsay rule ( Bank of NY Mellon v Selig , 165 AD3d 872, 874 [2d Dept 2018], see CPLR 4518[a] ; All Borough Group Med. Supply, Inc. v GEICO Ins. Co. , 43 Misc 3d at 29-30 ).
It is well established that review of records kept in the ordinary course of business does not confer upon the affiant personal knowledge ( Alleviation Med. Servs., P.C. v Allstate Ins. Co. , 191 AD3d 934, 935 [2d Dept 2021] ; JPMorgan Chase Bank, N.A. v Grennan , 175 AD3d 1513, 1517 [2d Dept 2019] ; U.S. Bank N.A. v 22 S. Madison, LLC , 170 AD3d 772, 774 [2d Dept 2019] ). On the other hand, in order to properly admit business files into evidence, the offering party must prove that
(i) the records are made within "a routine, regularly conducted business activity, and that [they are] needed and relied on in the performance of functions of the business;"
(ii) "it [is] the regular course of such business to make the record[s] [and] that the record[s] [are] made pursuant to established procedures for the routine, habitual, systematic making of such [records];"
(iii) "that the record[s] [are] made at or about the time of the event being recorded [and] that recollection [are] fairly accurate and the habit or routine of making the entries [are] assured"; and
( People v Kennedy, 68 NY2d 569, 579-580 [1986] )
(iv) "that the business records are made by the person who maintains the file with personal knowledge, or are received by the file keeper from someone with personal knowledge and that person has a duty to transfer the information accurately in a normal course of business" ( Johnson v Lutz , 253 NY 124, 127-28 [1930] ).
Here, Defendant failed to lay foundation to the "business records" exception to the hearsay rules. Thus Gilreath's statements in her affidavit that Etienne made misrepresentations on his application for insurance (see Gilreath Aff., Ex. 1) were hearsay ( Alleviation Med. Servs., P.C. v Allstate Ins. Co. , 191 AD3d 934, 935 [2d Dept 2021] ; Wells Fargo Bank, N.A. v Sesey , 183 AD3d 780, 783 [2d Dept 2020] ; U.S. Bank N.A. v 22 S. Madison , 170 AD3d at 774 ), therefore were not admissible.
Defendant also relied on printouts of public records searches, which purportedly showed that Etienne lived in Brooklyn, New York, that he registered his vehicle in New York, and had a long history of registering vehicles in New York State (see Gilreath Aff. Ex. 9). Here, Gilreath failed to establish who conducted the public record searches, when they were conducted or identify the sources from which they were drawn. Since Defendant failed to show that the printouts of the public records search were an accurate and fair representation of the electronic public records, they were inadmissible ( CPLR 4518[a] ; Werner v City of New York , 135 AD3d 740, 741 [2d Dept 2016] ; Dyer v 930 Flushing, LLC , 118 AD3d 742, 742-43 [2d Dept 2014] ). Defendant also presented correspondence from Etienne's attorney to Defendant dated June 13, 2013 (see Gilreath Aff., Ex. 11), which attached No Fault claim forms indicating that Etienne resided in Brooklyn, New York. Inasmuch as Gilreath's knowledge was based on review of the file, she provided no foundation for admissibility of that correspondence as discussed above. Finally, an affidavit dated December 12, 2016, of Rosenow, Defendant's Associate Director of Compliance and Development, was appended to Defendant's motion papers. Defendant's counsel made no reference to this affidavit in his affirmation. Rosenow's affidavit contained nearly identical content as Gilreath's affidavit and incorrectly cited to the exhibits under Gilreath's affidavit. Since Rosenow also attested to personal knowledge based on review of Defendant's records, it suffers the same infirmity as Gilreath's affidavit as addressed above.
Even if Gilreath's and Rosenow's affidavits were sufficient, while they were not, Defendant presented no "documentation of its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application," which was required to demonstrate material misrepresentation as a matter of law ( Piller v Ostego Mut. Fire Ins. Co. , 164 AD3d at 536 ; Caldara v Utica Mut. Ins. Co. , 130 AD3d at 666 ; Morales v Castlepoint Ins. Co. , 125 AD3d at 948 ; Lema v Tower Ins. Co. of NY , 119 AD3d at 657-58 ). Therefore, Defendant failed to meet its initial burden of demonstrating material misrepresentation by Etienne.
B. Failure to Attend Examinations Under Oath
Defendant further argued that Etienne's failure to submit to EUOs furnished additional grounds to dismiss Plaintiff's complaint.
Noncompliance with an insurance policy provision requiring disclosure through an EUO is a failure of a condition precedent to an insurer's duty to indemnify ( IDS Prop. Cas. Ins. Co. v Stracar Med. Servs., P.C. , 116 AD3d 1005, 1007 [2d Dept 2014] ; National Med. & Surgical Supply, Inc. v ELRAC, Inc. , 54 Misc 3d 131[A], 2017 NY Slip Op 50028[U] *1 [App Term 2d Dept 2017]) and is a material policy breach precluding recovery of proceeds under the insurance policy ( Nationwide Affinity Ins. Co. of Am. v George , 183 AD3d 755, 756 [2d Dept 2020] ; Interboro Ins. Co. v Clennon , 113 AD3d 596, 597 [2d Dept 2014] ). Again, here, Defendant relied on Gilreath's affidavit, in which she attested to Defendant's regular mailing procedures and that Defendant received Plaintiff's claim on September 9, 2013, and denied the claim on September 20, 2013 on the ground of material misrepresentation. Defendant also presented the denial of claim form which confirmed Gilreath's account (see Gilreath Aff., Ex. 12). Defendant's evidence showed timely denial of Plaintiff's claim which preserved its defense of fraudulent insurance procurement ( Central Radiology Servs., P.C. v Commerce Ins. Co. , 31 Misc 3d 146[A], 2011 NY Slip Op 50948[U] *1 [App Term 2d Dept 2011]).
Curiously, although Defendant had already denied Plaintiff's claim based on Etienne's material misrepresentation of his address and garage location, Defendant retained Connecticut counsel to schedule EUOs to "investigate the facts surrounding the accident, and determine the insured's address and the garage location of the insured vehicle ..." (Gilreath Aff. at 3). After repudiating its liability for Plaintiff's claim, Defendant may not mandate adherence to the policy's terms (Matter of State Farm Mut. Auto. Ins. Co. v Urban , 78 AD3d 1064, 1066 [2d Dept 2010] ; Auerbach v Ostego Mut. Fire Ins. Co. , 36 AD3d 840, 842 [2d Dept 2007], see Han-Ki Lee v American Tr. Ins. Co. , 304 AD2d 713, 714 [2d Dept 2003] ), which in this case included the obligation to submit to EUOs (see Gilreath Aff., Ex. 1 at 11). Therefore, this Court denies Defendant summary judgment dismissing Plaintiff's complaint on the grounds that Etienne failed to attend duly scheduled EUOs ( Han-Ki Lee v American Tr. Ins. Co. , 304 AD2d at 714 ).
Even if Defendant could properly raise Etienne's failure to attend EUOs as a basis for dismissing the complaint, while it did not, in order to establish a defense that an insured failed to attend a duly scheduled EUO, an insurer must present evidence of the timely and proper mailing of the EUO scheduling letters ( Nationwide Affinity Ins. Co. of Am. v George , 183 AD3d at 757 ; Progressive Cas. Ins. Co. v Metro Psychological Servs., P.C. , 139 AD3d 693, 694 [2d Dept 2016] ). This may be established with evidence of the actual mailing or by an affidavit of a person "with personal knowledge of the standard office practice for ensuring that the letters are properly addressed and mailed" ( Nationwide Affinity Ins. Co. of Am. v George , 183 AD3d at 757 ; Progressive Cas. Ins. Co. v Metro Psychological Servs., P.C. , 139 AD3d at 694 ). Since Defendant received Plaintiff's claim on September 9, 2013, the scheduling of the first EUO in a letter dated May 12, 2014 by the Connecticut law firm Defendant retained (see Gilreath Aff., Ex. 2), was well after thirty (30) days from receipt of Plaintiff's claim and therefore was untimely ( A.C. Med., P.C. v Ameriprise Ins. Co. , 54 Misc 3d 127[A], 2016 NY Slip Op 51787[U] *1 [App Term 2d Dept 2016]).
Since Defendant failed to make a prima facie showing of entitlement to judgment as a matter of law, the Court denies Defendant's Motion without considering Plaintiff's Opposition (see Pullman v Silverman , 28 NY3d 1060, 1062 [2016] ; Alvarez v Prospect Hosp. , 68 NY2d 320, 324 [1986] ).
IV. Order
Accordingly, it is
ORDERED that Defendant's Motion for summary judgment is denied.
This constitutes the Decision and Order of the court.