Ecstasy Limousine Inc. v Lancer Ins.

[*1] Ecstasy Limousine Inc. v Lancer Ins. 2005 NY Slip Op 51285(U) Decided on May 31, 2005 District Court Of Nassau County, Second District Cooper, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 31, 2005
District Court of Nassau County, Second District

ECSTASY LIMOUSINE INC., Plaintiff(s)

against

LANCER INSURANCE and TRANSPORTATION INSURANCE BROKERS, Defendant(s)



CC276/05



Michael C. Furst, Esq.

Curtis, Vasile, Devine & McElhenry

Alfred D. Cooper, J.

DECISION AFTER TRIAL

This is a Commercial Claims action pursuant to Uniformed District Court Act, Article 1802A, et seq, Section 1802-A. Ecstasy Limousine, Inc., hereinafter the plaintiff, has commenced this action against Lancer Insurance, Inc. and Transportation Insurance Brokers (hereinafter T.I.B.), hereinafter the defendants, to recover the sum of $5,000.00 for a loss resulting from vandalism to one of its vehicles.

The plaintiff contends the loss is covered pursuant to a policy of insurance with the defendant Lancer Insurance, Inc., which was secured through T.I.B. as broker. The plaintiff alleges that pursuant to the policy of insurance, for the term of September 24, 2003 through September 24, 2004, for it's limousines, including a 2003 Hummer, were covered for losses due to vandalism. The alleged loss to the 2003 Hummer Stretch Limousine which occurred on August 3, 2004 in Queens County, New York, was due to vandalism. The plaintiff alleges that the defendant Lancer Insurance rejected coverage and declined to pay the loss after a proper claim was submitted.

The within action by the plaintiff as to the defendant, T.I.B., is dismissed as a matter of law. The plaintiff has failed to demonstrate a prima facie case as to the defendant T.I. [*2]B. (see, CPLR §4401).

The defendant Lancer Insurance Company, Inc., hereinafter the defendant, in their defense raised at trial, asserted an exclusionary provision in the policy, and an affirmative defense of Insurance Law §3105(b), a material misrepresentation by the plaintiff in its application for coverage.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This Court conducted a bench trial of this matter on April 11, and April 22, 2005. Based on the credible evidence adduced at trial the Court makes the following findings of fact and conclusions of law.

In September of 2003, the defendant T. I. B. prepared an application at the request and for Ecstasy Limousine, Inc. for insurance coverage for three Limousines owned and operated by the plaintiff. The information in the application was secured from the plaintiff's principal and president Joey Harun. Sometime subsequent to the preparation of the written application for insurance coverage, Mr. Harun signed his name to the original application (Deft's. Exh. E. In Evid.). The written application for insurance coverage listed the corporate name of Ecstasy Limousine, Inc., with a corporate address of 25 Summers Street, Oyster Bay (Nassau County), New York 11771. There were also listed on the application, two Nassau County, telephone numbers (business and cell phone). As part of question number three (3) of the application, there was the preprinted question "Garage Address:" the response in the executed application was"saa" which may be and has been interpreted as "same as above". This later information appears under the broader application heading "Operations Information". In question number one (1), under the same heading, is "type of Garaging", the written response to this question was "indoor". In question number two (2) under "Operations Information", there is the question "Do employees take vehicles home? Yes No, if yes are they garaged? On Street Off Street". In the executed application the response to this latter question is "No". Above the signature line on the application, there is provided a caution concerning the giving of false information by the applicant or concealing information for the purpose of misleading the insurer or concealing any material facts.

T.I.B. on their letterhead dated October 17, 2003, addressed to the plaintiff corporation at 25 Summers Street, Oyster Bay, New York 11771, provided the plaintiff the following information with respect to the policy of insurance for plaintiff's three Limousines. "October 17, 2003

Joe Harun

ECSTASY LIMOUSINE INC

25 Summers Street

Oyster Bay, NY 11771 [*3]

RE: Lancer Insurance Company

Commercial Automobile

Policy No.BA156157Eff. 09/24/03 to 09/24/04

Dear Mr. Harun: Enclosed is the above- captioned policy. In the event of a loss, coverage will be determined by the terms, conditions and exclusions of the policy; please examine it carefully.Thank you for your business. If you have any questions regarding the above or require any additional assistance, please do not hesitate to call.

Sincerely,

Susan Wagner

Susan Wagner

Assistant Account Executive" (Deft's Ehx. D In Evid.)

The plaintiff's principal, Joey Harun, testified at trial that the insured vehicles were parked when not in use at the Oyster Bay address, in the driveway and rear yard, this testimony was inconsistent with the representations reflected in the application for the policy of insurance. Further, Mr. Harun testified that the transaction for coverage of the original vehicles, with T.I.B.s agent was over the telephone , and he was not aware of the policy exclusions. The Court finds, that the policy of insurance underwritten for the plaintiff's vehicles contained an exclusionary provision at page 6 of 11. The exclusionary provision provided:

"B. Exclusions

(4) (a) ( c) (d) 4. We will not pay for "loss" to any of the following:a. Tapes, records, discs or other similar audio, visual or data electronic devices designed for use with audio, visual or data electronic equipment.c. Any electronic equipment, without regard to whether this equipment is permanently installed, that receives or transmits audio, visual or data signals and that is not designed solely for the reproduction of sound.d. Any accessories used with the electronic equipment described in Paragraph c. above." (Deft's Exh. F In Evid.).[*4]

Here, the plaintiff's claim against the defendant seeks recovery for a loss of electronic components due to vandalism to a 2003 Hummer on August 3, 2004 which was added to the original policy in May 2004. The plaintiff alleges it's driver parked the vehicle, upon completion of his last dispatched assignment, at Metropolitan and Cooper Avenues in Queens County New York. When the plaintiff's principal inspected the vehicle later in the day, he discovered the rear passenger window had been broken and the following items were missing from and/or damaged in the 2003 Hummer Stretch Limousine. "Line Item

OperationDescription

REPAIRCLEAN AND DETAIL INTERIOR

INC R+1 SEATS

REMOVE/REPLACER QUARTER LOCK PILLAR TRIM PNL

REMOVE/REPLACEFRONT TV 15FLAT PANEL PANASONIC

W . PANEL INSTALLATION

REMOVE/REPLACE10 TELEVISION MONITI=ORS SCON/ROSEN

@$280.00 EA x10

REMOVE/REPLACE6 TV MONITOR BEZELS-CUSTOM FABRICATION

W/INSTALLATION @$350.00 EA x 6

REMOVE/REPLACEPLAY STATION 2

REMOVE/REPLACELIGHTED VANITY MIRROR

REMOVE/REPLACER REAR DOOR MOVEABLE GLASS

REMOVE/REPLACEINSTALL STEREO AND DVD-SEE AT INV#

1

INC GLASS INSTALL". (PL. Exh. 3 In Evid.).

There was also other damage to the vehicle. The total damage and loss sustained was in the sum of $9,194.50 including labor cost. The plaintiff has limited its recovery to the monetary jurisdictional limit of the commercial claims statute of $5,000.00.

ISSUES

The issues raised by this litigation are: (a) whether the defendant is liable to the plaintiff for the electronic components, accessory property and damage sustained on August 3, 2004, to the 2003 Hummer Stretch Limousine due to vandalism , (b) whether the plaintiff was on notice as to the exclusions of electronic components and accessories contained in the policy, and ( c) whether the plaintiff, knowingly, concealed a material fact which would have constituted a material misrepresentation pursuant Insurance Law §3105(b) which would void all coverage for loss to the plaintiff's vehicles "ab initio"?

THE LAW

It has long been recognized that, "[I]t is the intention of the parties and not the manual possession of a policy which determines whether there has been a delivery thereof. There must be an intention to part with the control of the instrument and to place it in the power of the insured or some person acting for him. Manual delivery to the [*5]insured in person is not necessary, nor is the fact that a policy has been turned over to the insured conclusive on the question of delivery. This matter of delivery is largely one of intent, and the physical act of turning over the policy is open to explanation by parol evidence. The deposit of an insurance policy in the mail, addressed to the insured, is a delivery.... and the same is true of the mailing or otherwise delivering the policy to [an] agent...". (Long v. New York Life Ins. Co., 106 Wash. 458, 463, 180 P. 479, 480 [1919]). Further, "[W]hen an insurance policy is mailed, with nothing further to be done on the part of either of the contracting parties, the contract becomes effective as of the time when and necessarily as of the place (2 Beale Conflict of Laws, 1056, note 6) from which it was mailed. (Western v. Genesee Mutual Insurance Co., 12 NY 258; Western Massachusetts Fire Ins. Co. v. Hilton, 42 App. Div. 52; Hammond v. International Railway Co., 63 Misc 437; affd., 134 App. Div. 995). Where a definite contract has been accepted by both parties, evidenced by the execution and issuance of the policy, with no conditions precedent to be performed, and nothing further to be done but transmission to the insured, delivery to the soliciting agent...who has naught to do but transmit it, is considered delivery to the insured. In such a case the agent is merely a conduit, as any public messenger would be. (New York Life Ins. Co. v. Rutherford, [C.C.A.] 284 Fed. 707; certificate denied, 262 U.S. 745; Mutual Life Ins. Co. Of Baltimore v. Otto, 153 Md. 179; 138 A.16) There is no question but that mailing of such a policy to the insured is sufficient delivery to [it]. (Hyde v. Goodnow, 3 NY 266; Stone v. Penn Yan, etc., R., 197 id 279). Whatever may be the rule with respect to the ordinary contracts, there is no reason why mailing to the agent of the insurer should not likewise be sufficient delivery so as to make the contract of insurance effective. (Jackson v. New York Life Ins., Co. [C.C.A.] 7 F.[2d] 31; Commercial Ins. Co. v. Hallock, 27 N.J.L. 645)...". Jones V. Metropolitan Life Ins. Co., 158 Misc. 466, 468, 286 N.Y.S. 4, 7 [1936].

Where a party insurer at trial evidences an office practice and procedure followed by it or its agent in the regular course of its business, which demonstrates that the policies have been duly addressed and mailed, a presumption arises that the policies have been received by the insures. (see, Nassau Insurance Co., v. Murray, etal, 46 NY2d 828, 829, 414 NYS2d 117, 118 [1978]). Denial of receipt by an insured, standing alone, is insufficient to rebut the presumption of receipt. In addition to an insured's claim of non receipt, there must be a demonstration that routine office practice of the insurer was not followed or was so careless that it would be unreasonable to assume that the policy was mailed (see, Nassau Insurance Co. v. Murray, etal, supra ).

Pursuant to Section 149(2) [Now §3105(b)] of the New York State Insurance Law, recovery under an insurance policy may be defeated if a material misrepresentation was made to the insurer and knowledge by the insurer of the facts misrepresented would have led to a refusal of coverage. Designcraft Jewel Industries v. St. Paul Fire and Marine Insurance Co., etal, 46, NY2d 796, 413 NYS2d 921 [1978]. A misrepresentation by an insured is material where the evidence adduced at trial demonstrates the insurer would not have issued the policy had it known the true nature of the matter misrepresented, Designcraft Jewel Industries v. St. Paul Fire and Marine Insurance Co., et al, supra ; Vebeliunas v. American Nat. Fire Ins. Co. 156 AD2d 555, 556, 549 NYS2d 60, 61 [1989]; [*6]Campese v. National Grange Mutual Ins. Co., 259 A.D. 957, 958, 689 NYS2d 313, 314 [1999].

ANALYSIS

In the case before the Court, the plaintiff claims that the loss sustained on August 3, 2004 was a covered loss under the policy. However, with respect to the policy exclusion contained at Exclusion B (4) (a) ( c) and (d) at paged 6 of 11 of the policy (Deft's Exh. F In Evid), the insured's principal, Mr. Harun, claims he was unaware of the exclusion as he dealt with a broker over the telephone and signed a facsimile application. Mr. Harun denied receipt of the policy and knowledge of the exclusions contained there in with respect to the television monitors, Play Station II, stereo and DVD's. Here, the credible evidence adduced at trial demonstrates that the policy was mailed to the plaintiff on October 17, 2003 [Deft's Exh. D In Evid] under a cover letter from defendant T. I. B. Further, the Court received in evidence the uncontradicted testimony of defendant's witness Susan Wagner, of the practice and procedure of T.I.B's. office policy and procedure in mailing policies of insurance to their insures. The plaintiff presented no evidence to either rebut this latter testimony or to demonstrate that the routine office practice or procedure was not followed in the plaintiff's case or was so careless that it would be unreasonable to assume that the policy was mailed (see, Nassau Insurance Co v. Murray, et al, supra ). Consequently, the deposit of an insurance policy in the mail, as evidenced here, addressed to the plaintiff, is a delivery of the policy. Long v. New York Life Ins. Co., supra ; Jones v. Metropolitan Life Ins. Co., supra . Where an insurance policy is mailed, as here, to the insured, with nothing further to be done on the part of either of the contracting parties, the contract becomes effective as of the place and date of mailing, i.e., October 17, 2003 (Western v. Genesee Mutual Ins. Co., supra ). There is no question but that mailing of such a policy to the plaintiff is sufficient delivery to it. (Hyde v. Goodnow, supra ; Stone v. Penn Yan, etc.,R., supra ). Here, the Court finds that the policy was mailed to the plaintiff on October 17, 2003, and it was delivered to the plaintiff and it was effective as of the latter date (Jackson v. New York Live Ins. Co., supra ). Consequently, the plaintiff was bound by the exclusionary provisions contained in the policy. As a result of the delivery of the policy to the plaintiff containing the latter electronic exclusions, and accessories claimed, the plaintiff was barred from recovery for the electronic items and accessories claimed as a result of the August 3, 2004 vandalism, and reflected in the appraisal of Island Auto Appraisers (PL. Exh. 3 In Evid).

DEFENDANT'S AFFIRMATIVE DEFENSE

As to the defendant's affirmative defense pursuant to Insurance Law §3105(b), Designcraft Jewel Industries v. St. Paul Fire and Marine Insurance Co., et al, supra ; Vebeliunas v. American Nat. Fire Ins. Co., supra ; Campese v. National Grange Mutual Ins. Co., supra , the Court finds the defendant offered uncontroverted evidence that the plaintiff represented that the vehicles would be garaged and maintained at 25 Summers Street, Oyster Bay,( Nassau County) New York, in its written application for insurance. In [*7]fact the evidence adduced at trial demonstrated the subject vehicle and three (3) others were not and could not have been maintained at the Oyster Bay, (Nassau County) address due to the lack of capacity in the driveway and back yard at the latter location to accommodate these vehicles. The evidence demonstrated the vehicles in fact were maintained in Queens County, New York. Further, the credible evidence adduced at trial demonstrated that the contact base for the driver of the vehicles was a Queens County telephone number. [Pl. Exh. 2 In Evid.] . Finally, the defendant offered and the Court received the un-rebutted testimony of its underwriter. The underwriter testified that had the defendant insurer known the vehicles were being maintained in any other location other than Oyster Bay, Nassau County, it would not have underwritten the coverage due to the increased risk assigned to the Queens County location. The representations by the plaintiff in the application for insurance as to the location where the vehicles were to be maintained were material. Had the insurer known the truth of the matter at the time of application, it would have resulted in the denial of coverage. Insurance Law §3105(b); Designcraft Jewel Industries v. St. Paul Fire and Marine Ins. Co., et al, supra ; Campese v. National Garage Mutual Ins. Co., supra .

CONCLUSION

The Court finds, the policy of insurance was delivered to the plaintiff on or around October 17, 2003. Further, that the policy contained an Exclusion provision which barred recovery by the plaintiff for the electronic items claim as a loss due to vandalism of its 2003 Hummer. The Court also finds, the plaintiff's misrepresentations as to where the 2003 Hummer as well as the other three vehicles were to be maintained was a material misrepresentation and that said material misrepresentation rendered the coverage for the 2003 Hummer and other vehicles void "ab initio". The Court holds, the defendant had no obligation to pay the plaintiff for any loss due to vandalism of the vehicle pursuant to the exclusion provision of the policy and Insurance Law §3105(b). The Court awards a judgment of dismissal of the plaintiff's claim against the defendant on the basis of the exclusion provision of the policy, and Insurance Law §3105(b).

This constitutes the decision and judgment of this Court.

So ordered:

DISTRICT COURT JUDGE

Dated: May 31, 2005

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