Kvest LLC v Cohen

Kvest LLC v Cohen 2011 NY Slip Op 05984 Decided on July 21, 2011 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on July 21, 2011
Saxe, J.P., Acosta, DeGrasse, Abdus-Salaam, Manzanet-Daniels, JJ.
110098/07 5322

[*1]5321-Kvest LLC, Plaintiff-Appellant,

v

Mitchell Cohen, et al., Defendants-Respondents.



 
Litman & Jacobs, New York (Betty Jane Jacobs of counsel),
for appellant.
Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, White
Plains (Nancy Quinn Koba of counsel), for respondents.

Judgment, Supreme Court, New York County (Carol R. Edmead, J.), entered September 8, 2010, dismissing the complaint, and bringing up for review an order, same court and Justice, entered July 1, 2010, which granted defendants' motion for summary judgment dismissing the complaint, and denied plaintiff's cross motion for summary judgment as to liability, and an amended order, same court and Justice, entered August 23, 2010, which directed the Clerk to enter judgment accordingly, unanimously modified, on the law, to reinstate the first, second and third causes of action and, as so modified, affirmed, without costs. Appeal from the August 23, 2010 order, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Plaintiff alleges that its insurance carrier disclaimed coverage because defendants, plaintiff's insurance brokers, failed to timely forward to the carrier an April 26, 2004 claim letter from an injured party's attorney. We reject defendants' contentions that the disclaimer was ineffective and that plaintiff's claims are moot. According to trial testimony in the carrier's declaratory judgment action, the carrier never received the claim letter from defendants. If this is true, the carrier would not have had any knowledge of the existence, let alone the late notification, of the claim letter when it disclaimed coverage. Therefore, its failure to assert that defense was not a waiver thereof (see Estee Lauder Inc. v OneBeacon Ins. Group, LLC, 62 AD3d 33, 35 [2009]).

Plaintiff is not barred by the doctrine of judicial estoppel from asserting that the disclaimer is valid because it did not prevail in the declaratory judgment action (see Rothstein & Hoffman Elec. Serv., Inc. v Gong Park Realty Corp., 37 AD3d 206, 207 [2007], lv denied 8 NY3d 812 [2007]; Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168, 176 [1998], lv dismissed 92 NY2d 962 [1998]). However, contrary to plaintiff's argument, the doctrine of collateral estoppel does not bind defendants to the declaratory judgment court's determination that defendants did not timely notify the carrier of the claim letter. Defendants were not parties to that action. The doctrine of collateral estoppel is binding only upon parties or their privies who have had a full and fair opportunity to litigate issues determined in prior proceedings (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485-486 [1979]).

Defendants state in their affidavit that they mailed a copy of the claim letter to the carrier [*2]on May 6, 2004, two days after they received it from plaintiff. However, a notice of occurrence/claim form prepared by defendants on October 2, 2004 indicates that the claim had not previously been reported. This raises a triable issue of fact as to whether defendants timely notified the carrier of the claim letter.

Contrary to defendants' assertion, the damages recoverable in this action can include plaintiff's reasonable attorneys' fees incurred in defending the carrier's declaratory judgment action in its effort to mitigate its damages (see Martini v Lafayette Studio Corp., 273 AD2d 112, 114 [2000]). On the other hand, the breach of fiduciary duty cause of action was properly dismissed as the facts establish that the parties had nothing more than a
typical insurance broker-customer relationship (see e.g. Murphy v Kuhn, 90 NY2d 266, 270-271 [1997]).

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JULY 21, 2011

CLERK