Utica First Ins. Co. v. Cote Agency Inc.

Full title: UTICA FIRST INSURANCE COMPANY, Plaintiff, v. COTE AGENCY INC., COTE…

Court: Supreme Court, Oneida County

Date published: Sep 21, 2023

2023 N.Y. Slip Op. 34657 (N.Y. Sup. Ct. 2023)

Opinion

Index No. EFCA2022-001913

09-21-2023

UTICA FIRST INSURANCE COMPANY, Plaintiff, v. COTE AGENCY INC., COTE AGENCY, INC. d/b/a COTE INSURANCE AGENCY, BALDES PROTECTION AGENCY, INC. d/b/a COTE AGENCY, BALDES PROTECTION AGENCY, INC. d/b/a COTE INSURANCE AGENCY, Defendants.

FARBER BROCKS & ZANE, LLP LESTER L. CHANIN, ESQ. ATTORNEY FOR PLAINTIFF SULLIVAN & KLEIN, LLP ROBERT M. SULLIVAN, ESQ. ATTORNEY FOR DEFENDANTS

Bernadette T. Clark, Judge

Unpublished Opinion

FARBER BROCKS & ZANE, LLP LESTER L. CHANIN, ESQ. ATTORNEY FOR PLAINTIFF

SULLIVAN & KLEIN, LLP ROBERT M. SULLIVAN, ESQ. ATTORNEY FOR DEFENDANTS

PRESENT: HONORABLE BERNADETTE T. CLARK JUSTICE PRESIDING

DECISION AND ORDER

Bernadette T. Clark, Judge

Clark, Bernadette T.

Presently before the Court is a motion brought on behalf of the defendants (hereinafter "Baldes") pursuant to Civil Practice Law and Rules § 3211(a)(5), which motion seeks an Order dismissing the plaintiff s sixth cause of action sounding in negligence on the ground that this particular cause of action is barred by the relevant statute of limitations.

In weighing this motion, the Court examined and considered the entirety of Baldes's initial submission, including a notice of motion, a memorandum of law, the affirmation of Robert M. Sullivan, Esq., and the several exhibits appended thereto, namely, (A) the entity information maintained by New York Secretary of State for the Baldes Protection Agency, Inc.; (B) an e-mail between counsel dated September 2, 2022; (C) a copy of the supplemental summons and amended verified complaint in this matter; and, lastly, (D) a copy of Baldes's answer. This Court also examined and considered the papers submitted by the plaintiff in opposition to the foregoing. These papers consisted of a memorandum of law and the affirmation of Lester L. Chanin, Esq., which, too, was accompanied by exhibits, including, once again, the plaintiffs supplemental summons and amended verified complaint and, also, an affidavit by Joseph D. Aguirre. Finally, this Court considered the several items submitted in reply to the plaintiffs opposition. These items consisted of another memorandum of law, a second affirmation by Mr. Sullivan, Esq., and the several exhibits appended to the latter, including (A) a copy of a Partner Program Services Agreement, dated October 1, 2010, between Baldes and The DeForest Group, Inc.; (B) a copy of an Agency Agreement, dated October 1, 2012, between Baldes and the plaintiff; (C) an e-mail from the plaintiff to Baldes, dated January 21, 2021; (D) a copy of a decision rendered by the Workers' Compensation Board denying benefits to Joaquin Antonio Feliciano; (E) a copy of a decision rendered by the Administrative Review Division of the Workers' Compensation Board reversing the aforementioned denial of benefits; (F) a redacted letter from Michael C. Conway, Esq., to Baldes; (G) a tender letter of February 6, 2018, from Erie Insurance Company to Ralph Jansen, Jr.,; (H) a second tender letter from Erie Insurance Company to Mr. Jansen, which letter was dated March 12, 2028, and was also addressed to Baldes; (I) a letter to Mr. Jansen from the plaintiff, dated August 23, 2018, disclaiming insurance coverage; (J) a facsimile transmission from Baldes to the plaintiff requesting reconsideration of that disclaimer; (K) a subsequent letter from the plaintiff to Mr. Jensen, dated September 11, 2018, reiterating its disclaimer of coverage; and, finally, (L) a letter of October 21, 2020, from plaintiffs counsel to Mr. Jansen reiterating the plaintiffs position with regard to coverage.

Background

This action arises out of a construction accident that occurred on December 8, 2017, wherein an individual by the name of Joaquin Feliciano suffered bodily injury while allegedly in the employ of Ralph Jansen, Jr., who was doing business as Build a Beast. At the time of this accident, Build a Beast was a subcontractor to Cillis Builders, which was the general contractor on the subject construction project and was ultimately sued by Mr. Feliciano for negligence and violations of the Labor Law. In turn, Cillis Builders eventually commenced a third-party action against Mr. Jansen for, inter alia, contractual indemnity, and, at or around that time, its insurance carrier, i.e., Erie Insurance Company, sent to Mr. Jansen a tender letter, dated March 12, 2018. Importantly, this letter was also addressed to Baldes inasmuch as Mr. Jansen had, theretofore, procured a policy of insurance from the plaintiff, and Baldes was the plaintiffs alleged agent with respect to that policy. The plaintiff alleges that Baldes neglected to forward or otherwise apprise it of this tender letter and that its first notice of any claim came by way of a facsimile transmission from Baldes months later on August 3, 2018, which transmission included, among other things, a copy of the third-party summons and complaint by Cillis Builders against Mr. Jansen in the lawsuit filed by Mr. Feliciano. Promptly thereafter, on August 22, 2018, the plaintiff issued a letter to Mr. Jansen disclaiming coverage based on several purportedly applicable policy exclusions, but, apparently unbeknownst to the plaintiff, this disclaimer was untimely owing to the much earlier tender letter to Baldes of March 12, 2018, and the notice requirements of Insurance Law § 3420(d)(2). Then, some two years later, on October 30, 2020, during the course of the litigation commenced by Mr. Feliciano, Baldes is alleged to have finally acknowledged receving the tender letter of March 12, 2018. Upon the revelation of this earlier notice to Baldes and in recognition of the seeming unenforceability of its disclaimer of coverage as a result, the plaintiff, in January of 2021, paid $660,000 to settle the lawsuit brought by Mr. Feliciano. In the aftermath of doing so, the plaintiff commenced the instant action against Baldes by the filing of a supplemental summons and amended complaint on September 20, 2022, which complaint asserted causes of action grounded generally in Baldes' failure to promptly notify the plaintiff of the claims arising out of Mr. Feliciano's injury and subsequent lawsuit, including the sixth cause of action sounding in negligence that is the subject of the motion presently before the court.

Analysis

The defendant has moved to dismiss the sixth cause of action asserted in the plaintiffs amended complaint on the ground that it cannot be maintained due to the applicable statute of limitations. At the outset, this Court notes that, in weighing the defendant's motion to dismiss, it must afford the plaintiffs complaint a liberal construction, accept the facts as alleged in the complaint as true, and accord the plaintiff the benefit of every possible favorable inference. Leon v. Martinez, 84 N.Y.2d 83 (1994) and Chanko v. Am. Broad. Companies Inc., 27 N.Y.3d 46 (2016). Moreover, because the defendant seeks an order dismissing the plaintiffs sixth cause of action on the ground that it is time-barred, this Court notes that the defendant must make a prima facie showing that the period within which to commence a timely lawsuit has expired and, then, once, and only if, such a showing has been made, the burden shifts to the plaintiff to raise a question of fact as to whether the action was actually commenced within the applicable statute of limitations, the statute of limitations has been tolled, or an exception to the limitations period is applicable. Kulback's Inc. v Buffalo State Ventures, LLC, 197 A.D.3d 890 (4^th Dept. 2021); Quinn v. McCabe, Collins, McGeough & Fowler, LLP, 138 A.D.3d 1085 (2^nd Dept., 2016); see also Hoosac Valley Farmers Exchange v. AG Assets, Inc., 168 A.D.2d 822 (3^rd Dept., 1990) and Horowitz v. Foster, 180 A.D.3d 783 (2^nd Dept., 2020).

Inasmuch as the cause of action at issue here indisputably sounds in negligence and seeks to "recover damages for an injury to property," the applicable statute of limitations is Civil Practice Law and Rules § 214(4), which requires that an action "be commenced within three years." Three years measured backwards from September 20, 2022, i.e., the date on which the instant action against Baldes was commenced, is, of course, September 20, 2019, meaning that the plaintiffs sixth of action is time-barred only if it accrued earlier than that date. On this score, and also indisputably, the accrual of a claim for property damage occurs when the plaintiff suffers injury from the wrong perpetrated by the defendant - that is to say, when damages are sustained - and neither the date of the defendant's wrongful act nor the plaintiffs discovery of its injury is determinative as to the date of accrual. Kronos, Inc. v AVX Corp., 81 N.Y.2d 90 (1993) and IDT Corp, v Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132 (2009).

Notwithstanding the incontrovertible realities outlined above, the parties here are at loggerheads over whether the plaintiffs sixth cause of action is time-barred owing entirely to their disagreement over when the plaintiff sustained an actionable injury or, more particularly, what constitutes the actionable injury relative to the plaintiffs sixth cause of action. In this regard, and for its part, Baldes disputes the notion that the controlling injury for accrual purposes is the plaintiffs payment, in January of 2021, of $660,000 in settlement of the lawsuit brought by Mr. Feliciano. Instead, Baldes contends that the plaintiffs sixth cause of action accrued on or before August 3, 2018, and is thus time-barred, because that is when the plaintiff sustained an actionable injury - that injury, according to Baldes, being the plaintiffs inability by that point to disclaim coverage under the insurance policy at issue on account of Baldes's alleged failure to give notice of the tender letter from March 12, 2018, and the notice requirements of Insurance Law § 3420(d)(2). In support of its position, Baldes, to be sure, cited to certain items of decisional authority addressing, generally, the issue of accrual with regard to a negligence cause of action and, indeed, some that addressed this issue in the context of a negligence claim involving insurance coverage. That said, the cases cited by Baldes are eminently distinguishable from the instant case and do little to persuade this Court on the very specific issue raised by the present motion, namely, the time of accrual of a cause of action against an insurer's agent for failing to give the insurer proper notice of a claim against an insured where that failure then forecloses a timely disclaimer of coverage.

On this specific issue, the case of Bond v. Progressive Ins. Co. seems particularly germane and, for that reason, very persuasive. Bond v Progressive Ins. Co., 82 A.D.3d 1318 (3^rdDept., 2011). Bond involved a collision between the operator of a snowmobile and a vehicle insured by Progressive Insurance Company. The insured party allegedly apprised his insurance broker of the claim against him arising out of that collision, but the broker failed to notify Progressive accordingly. As a result, no attorney appeared on the insured's behalf, and a default judgment was then entered against the insured as to liability. It was not until later, after an inquest was conducted, that a final judgment was entered awarding damages to the operator of the snowmobile in the amount of $1.2 million, and, thereafter, Progressive declined a request for payment. The insured then assigned his claims against Progressive and, more pertinently, the broker, whereupon the assignee promptly commenced an action asserting, inter alia, a cause of action against the broker sounding in negligence. This particular case is noteworthy because the broker, like Baldes here, moved to dismiss that cause of action as time-barred, and, in affirming the denial of the motion, the Appellate Court held that the injury underlying the assignee's claim against the broker was not sustained - and the assignee's cause of action did not accrue - until the broker's failure to notify caused harm in the form of the judgment awarding damages against the insured. Very tellingly, it was the award of financial damages against the insured - a pecuniary injury - not the insured's loss of the opportunity to contest liability by virtue of the default judgment that, according to the Court, constituted the actionable injury that created an enforceable claim. In the instant case, Baldes argues that the plaintiff suffered an actionable injury upon its loss of the opportunity to disclaim coverage, and, notably, it does so without identifying with particularity the date on which that occurred, but, frankly, based upon the holding of the Court in Bonds, this Court is not convinced. Rather, it would appear that the plaintiff in the instant case suffered an actionable injury upon its agreement to settle the suit brought by Mr. Feliciano, whereupon the plaintiff suffered pecuniary harm - not the more nebulous harm of its potentially lost opportunity to disclaim coverage.

Inasmuch as the papers submitted by Baldes make clear that the agreement to settle the Feliciano matter, and the payment of $660,000 in connection therewith, occurred in January of 2021, and because the instant action against Baldes was commenced on September 20, 2022, well within three years, the defendant has, in this Court's view, failed to carry its burden with regard to the instant motion, and, accordingly, the motion must be denied.

The Court has reviewed and considered the remaining arguments and contentions of the parties and finds them to be without merit.

Now, therefore, in accordance with the above, it is hereby

ORDERED that the motion brought on behalf of the defendants is DENIED.

This shall constitute the Decision and Order. The original Decision and Order is returned to the attorney for the Plaintiff. All other papers are being delivered by the Court to the County Clerk for filing. The signing of this Decision, Order does not constitute entry or filing under CPLR Rule 2220. Counsel is not relieved from the applicable provisions of that rule with respect to filing, entry and notice of entry.