3094 Brighton, LLC v Zurich Specialties

[*1] 3094 Brighton, LLC v Zurich Specialties 2009 NY Slip Op 50316(U) [22 Misc 3d 1128(A)] Decided on February 9, 2009 Supreme Court, Kings County Knipel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 9, 2009
Supreme Court, Kings County

3094 Brighton, LLC, Plaintiff,

against

Zurich Specialties, et al., Defendants



28907/07



Attorneys for Plaintiff

David Feinsilver, Esq.

The Feinsilver Law Group, P.C.

26 Court Street - Suite 2305

Brooklyn, NY 11242

(718) 522-5025 or (212) 279-1069

Please Reply to:

The Feinsilver Law Group, P.C.

215 Millburn Avenue

Millburn, NJ 07041

(973) 376-4400

Attorneys for the Defendant Zurich Specialties

Sharon Angelino, Esq.

Goldberg Segalla, LLP

665 Main Street - Suite 400

Buffalo, NY 14203

Attorneys for the Defendant Zurich Specialties

Michael E. Gorelick, Esq. Abrams, Gorelick, Friedman & Jacobson, P.C.

One Battery Park Plaza

New York, NY 10004

Attorneys for the Defendants Ali Haidear and Muhammad Nawaz

Beth Rogoff, Esq.

Kardisch, Link & Associates, P.C.

53 Park Avenue - Suite 201

Rockville Centre, NY 11570

Attorney for Defendants Engle Martin Claims Administration

Services & Engle Martin & Associates, Inc.

Paul J. Solda, Esq.

350 5th Avenue

New York, NY 10118

Attorney for Defendant Brooks Insurance Agency

Fredric C. Fray, Esq.

General Counsel

Brooks Insurance Agency

184 Route 9 North

Willow Pointe Shopping Center

Englishtown, NJ 07726

Lawrence S. Knipel, J.

In this declaratory judgment action, plaintiff 3094 Brighton, LLC ("Brighton") moves for an order, pursuant to CPLR 3212, seeking (1) partial summary judgment to compel defendant Zurich Specialties (London) ("Zurich") and/or Brooks Insurance Agency, Inc. ("Brooks"), to (a) defend and indemnify it in an underlying personal injury action captioned Ali Haidear, an infant by his father and natural guardian Muhammad Nawaz, and Mawad Nawaz individually, v. 3094 Brighton, L.L.C., Muhammed Ashig Chaudry and Fauzia Ashiwchaundhry, filed in New York Supreme Court, Kings County, Index Number 5125/01 ("the Haidear action")[FN1]; and (b) to pay/reimburse it for costs already undertaken in the Haidear action; and (2) "default and a default judgment" against Brooks for its failure to [*2]serve an Answer to Brighton's complaint.[FN2] Defendant Zurich moves for an order, pursuant to CPLR 3124, compelling Brighton to provide responses to its interrogatories and discovery demands, and requesting preclusion language in the Court's Order.

In moving for partial summary judgment as against Zurich, Brighton argues that Zurich erroneously disclaimed coverage of Brighton in the Haidear action based on grounds that it was not a named insured under the subject policy. According to Brighton, there is no factual dispute that it was a named insured under insurance policy 00147 (hereinafter "the policy"), which was bound and issued by Zurich to Eshel Management for the period(s) of September 2, 2000 through at least March 2, 2002. Eshel Management managed the apartment building property located at 3094 Brighton 5th Street, for Brighton, who owned the building. According to Brighton, and supported by the affidavit of Mendel Weiss, who served as the insurance broker for Eshel Management Co., it is common practice in the commercial insurance industry for apartment owners/management groups to obtain such package insurance coverage in the name of a management company which manages the properties in which the ownership group has an interest; and to have one master policy that names the management company as the primary insured, with schedules listing covered properties and covered entities which own the properties as additional named insureds, being attached thereto. Brighton also attaches a "realty information sheet" and "schedule of named insureds," which were prepared and furnished by Mendel Weiss to Brooks prior to the date that Zurich coverage (and Legion coverage) was bound. According to these documents, Brighton is listed as entry No.17 on the realty information sheet (listing the covered property location at 3094 Brighton 5th Street; and as entry #18 on the schedule of named insureds (listing Brighton's status as an additional insured) under the policy.[FN3]

Plaintiff also disputes Zurich's second basis for declining coverage on the grounds that it received notice of the Haidear action on June 6, 2005, which was untimely. Plaintiff alleges that, within days of being served with the summons and complaint in the Haidear Action, it forwarded the summons and complaint to Mendel Weiss, who subsequently forwarded the summons and complaint, together with a notice of claim bearing both defendant Zurich's and Legion's names and policy numbers, to Brooks, as the authorized [*3]agent and representative for both companies, on or about February 15, 2001.[FN4] In support, Brighton attaches a February 15, 2001 fax from Mendel Weiss to Brooks, along with confirmation of receipt, notifying Brooks of the Haidear action. Brooks maintains that it subsequently furnished notice of the Haidear lawsuit to both non-party Legion and Zurich.The Law Firm of Malapero & Prisco ("Malapero & Prisco") was retained to defend Brighton in the Haidear action,[FN5] but, it is argued, Brighton was unaware as to which insurance compan(ies) and/or third party administrator had retained said defense counsel.[FN6] After the Haidear Action was stayed by reason of orders relating to the rehabilitation and insolvency proceedings affecting Legion, Malapero & Prisco successfully moved for leave to withdraw. Subsequently, Brighton alleges that, during or about April 2005, it was forced to retain present counsel to review the circumstances and status of its insurance coverage, and to protect its interests in the Haidear Action. Upon learning that Zurich was not involved in the defense of the claim, Brighton demanded that Zurich honor its obligations under the policy by providing Brighton with a defense in the Haidear action and indemnifying it from any liability.

In addition, Brighton alleges that it further relied upon Brooks' authority to bind Zurich by (1) allowing Brooks and or co-defendant Engle Martin Claims Administration (and/or Zurich) to select counsel to represent Brighton and control the defense of the Haidear action; (2) believing Brooks' representation that Zurich had agreed to provide a defense in the Haidear action and had agreed to indemnify Brighton for the Haidear claims; and (3) believing Brooks' representation that Zurich was paying for the cost of the defense. [FN7]

Accordingly, Brighton requests that the Court enter judgment compelling Zurich to pay/reimburse it for all of its costs, disbursements and reasonable attorney's fees of this action and for those incurred in the Haidear action; and compelling Zurich to provide Brighton with a defense in the Haidear action and indemnification from any judgment or settlement in the Haidear Action. [*4]

Both Brooks, and defendants Ali Haider, an infant by his father and natural guardian Muhammad Nawaz and Muhammad Nawaz, individually (hereinafter, collectively, "the Haider defendants")[FN8] support that part of Brighton's motion seeking summary judgment against Zurich. They argue that Brighton's obligation to notify its insurance providers of the Haidear action was not triggered until February 14, 2001, when it was served with the Summons and Complaint in the Haidear action, and that Mendel Weiss's February 15, 2001 notice to Brooks satisfied the notice requirement of the insurance policy. Brooks also attaches the affidavit of Mr. Rosen, the Vice President of Brooks, who avers that, when it wrote Zurich the policy with Eshel Management as the principal named insured, it was with the understanding that each of the properties listed as managed by Eshel Management were owned by separate limited liability companies or corporations and that each of those entities were also considered insureds under the policy. Mr. Rosen also avers that Brooks received the faxed claim memorandum, notice of claim and complaint in the underlying action from Mendel Weiss on February 15, 2001.

In the alternative, the Haider defendants request that the Court grant them the automatic right of subrogation to the rights of Brighton as to the benefits of the policy if and when the Haider defendants obtain a judgment against plaintiff in the underlying action.

Zurich contends that Brighton's motion is both improper and premature based on outstanding discovery that Brighton itself has failed to provide, including a set of interrogatories and discovery demands served upon plaintiff on September 28, 2007, and it separately moves to compel Brighton to provide discovery.[FN9] Zurich also argues that Brighton's motion must be denied because Brighton is not identified as an insured under the policy, and that the "realty information sheet" and "schedule" annexed to Brighton's motion bears no discernible relation to the policy.[FN10] Zurich also refers to the affidavit of Nathan Barnett, who has worked as a Claims Manager for Zurich for the past three years, in which he states that the policy produced by Brooks (1) contained no schedule of named insureds; (2) gave no authority to bind multiple risks under "master policies;" to settle liability claims, accept defense or indemnity, appoint defense counsel or appoint third-party agents. In addition, Mr. Barnett contends that several allegations made by Brighton, including that Zurich purportedly agreed to defend and indemnify Brighton, occurred well after March 1, [*5]2001, when Brooks' authority to bind Zurich terminated.

Lastly, Zurich maintains that Brighton failed to provide timely notice of the Haidear action. It argues that, while Brighton was aware of the Haidear action as of February 15, 2001, Zurich did not receive notice of the action or its claims until June 6, 2005. Zurich also contends that the "Claim Fax Transmission Memorandum" from Mendel Weiss containing such notification (via Brooks) does not have a written acknowledgment from Brooks that the notice was received by it, or that the notice of claim was provided to Zurich or any other insurer.

In response, Brighton contests the relevancy of Mr. Barnett's affidavit, as Mr. Barnett had no involvement with Brooks on September 2000, when the policy was bound and issued, or on February 15, 2001, when Brighton pruportedly sent notice of the Haidear action to Zurich. Further, Brighton refers to the affidavit of Mr. Weiss, who confirmed the authenticity of the "realty information sheet" and "schedule of named insured" in relation to the policy. In addition, Brighton refers to the affidavit of Mr. Rosen, who avers that Brooks received the "realty information sheet" and "schedule of named insured" before binding coverage. Moreover, Mr. Rosen's affidavit indicates that (1) in 2001 Brooks had authority to act as Zurich's agent; (2) Brooks acknowledged receipt of the facsimile notice sent by Mendel Weiss concerning the Haidear action; and (3) during the time period that the Binding Authority Agreement remained in effect, it was commonplace for Brooks, as Zurich's authorized agent, to accept such service of a notice of claim from Zurich's insurers.

The remainder of Brighton's motion seeks a "default and default judgment" entered as against Brooks, pursuant to CPLR 3215(a) on Count One, Two, Three and Four of the Complaint. Plaintiff alleges that Brooks was duly served with the summons and complaint on August 14, 2007, but failed to serve an answer or otherwise move. Brooks, however, maintains that it remedied the alleged default by serving its Verified Answer on June 23, 2008, pursuant to a stipulation executed by the parties. According to the stipulation, plaintiff agreed to withdraw its motion for a default judgment against Brooks on the condition that Brooks waives any jurisdictional defenses and answers, moves or otherwise acts with respect to the complaint on or before June 25, 2008.

To prevail on a motion for summary judgment, the movant must present a prima facie case demonstrating entitlement to judgment as a matter of law (Prince v Di Benedetto, 189 AD2d 757 [1993]). Once the movant has established a prima facie case, the burden shifts to the party opposing the motion to produce evidentiary proof sufficient to require a trial of material questions of fact (Zuckerman v City of New York, 49 NY2d 557 [1980]). The evidence submitted must be scrutinized in the light most favorable to the party opposing the motion (Goldstein v Monroe County, 77 AD2d 232 [1980]).

The Court finds that Brighton has made the prima facie showing that it was a named insured under Zurich Policy 00147. As Zurich's (and Legion's) authorized agent, Brooks wrote the policy that it also wrote simultaneously for Legion. According to the affidavits of both Mr. Rosen, the Vice President of Brooks, and Mendel Weiss, it was understood that [*6]each of the separately listed properties that Eshel managed was named as insured under the policy. In addition, both aver that when Mendel Weiss placed an order the for policy 00147, it furnished Brooks with annexed schedules listing the parties to be named as additional insureds for the purpose of obtaining a package quote and binder of the quoted coverages. In opposition, Zurich does not dispute Brooks' admitted receipt of the realty information sheet and the schedule when Mendel Weiss placed the order for the policy. The affidavit from Mr. Barnett failed to raise any issues of fact, as he did not assume claims management responsibilities for policies that Brooks underwrote for Zurich until 2005, and therefore has no personal knowledge of the facts involving the policy during the policy period. Zurich also fails to identify the purported relevance of any additional outstanding discovery with respect to Brighton's summary judgment motion, particularly in light of the documentary evidence provided by Brighton and Brooks (see Campbell v City of New York, 220 AD2d 476 [1995]; see also Smith v Fishkill Health-Related Center, Inc., 169 AD2d 309 [1991], lv denied 78 NY2d 864 [1991]). Lastly, the Court finds Zurich's remaining arguments, which include allegations of inconsistent policy declarations and altered schedules, to be without merit (Shaw v Time-Life Records, 38 NY2d 201 [1975][Where a party has established a prima facie case, a motion for summary judgment "may not be defeated merely by surmise, conjecture or suspicion"]).

The Court also finds that Brighton timely notified Zurich, via its agent Brooks, of the Haidear action on February 15, 2001, that Brooks had the authority to accept such notice on behalf of Zurich. Compliance with the notice requirements of an insurance policy is "a condition precedent to coverage (Centrone v State Farm Fire & Casualty, 275 AD2d 728 [2000], lv denied, 96 NY2d 704 [2001]). An insurance policy provision which requires notice to be afforded to the insurer "as soon as practicable" requires that notice be given within a reasonable time under the attending circumstances (See Holmes v Morgan Guar. and Trust Co. of New York, 223 AD2d 441 [1996]). The Binding Authority Agreement clearly indicates that Brooks was authorized to accept receipt of Brighton's notice of the Haidear claims on February 15, 2001. Brooks served as Zurich's policy writer and agent on February 15, 2001, and therefore was authorized to receive notice of Haldear action on said date (see, White v City of New York, 81 NY2d). The affirmation of Mendel Weiss, the facsimile transmission from Weiss to Brooks, and the facsimile confirmation page, and the fact that Legion undertook the defense of Brighton in the Haidear action, all support the fact that Brooks received timely notice of the Haidear action. Moreover, Brooks indicates that it received said notice. Zurich is thus bound by Brook's February 15, 2001 receipt of the Brighton's notice of claim, regardless of whether Brooks subsequently forwarded said notice to Zurich. Accordingly, the Court grants that aspect of Brighton's motion for partial summary judgment as against Zurich with respect to the first and second counts of its complaint.

That portion of Brighton's motion seeking a "default and default judgment" as against Brooks is rendered moot pursuant to the stipulation entered into by the parties. [*7]

Zurich's motion to compel discovery is denied, as Brighton contends that it has already produced the relevant documents as part of (1) its pre-action correspondence with Zurich's counsel; (2) exhibits to the verified compliant; and/or as (3) exhibits to its moving papers, and Zurich has failed to explicitly dispute said contention. The parties are to appear in the Intake Part for a conference on Monday, March 23, 2009 at 9:30 A.M. in order to set forth a schedule concerning any remaining outstanding discovery.

This constitutes the Decision and Order of the Court.E N T E R,

J. S. C. Footnotes

Footnote 1:According to the complaint filed in the Haidear action, Ali Haidear suffered lead poisoning after April 1, 2000 while residing at 3094 Brighton's apartment building, and prior to April 1, 2000, at at the building of the co-defendants in the action.

Footnote 2:According to Brooks, that part of plaintiff's motion seeking default and default judgment against should be denied as moot, as Brooks remedied the alleged default by serving its Verified Answer.

Footnote 3:Brighton had also procured, through Brooks, additional primary lead poisoning coverage issue by non-party Legion Indemnity Co. (hereinafter, "Legion") for the same time period. Legion is not named as a party herein, as it is insolvent and defunct, having been liquidated. Legion defended the subject claim in the underlying action until its demise.

Footnote 4:The companies on the claim notice are listed as "Legion Ind./Zurich," and the policy numbers are listed as "GL31521840/00147."

Footnote 5:Brighton submits that, nevertheless, any actions taken by Brooks to notify Zurich of the Haidear action is irrelevant, as service of the notice of claim upon Brooks constitutes good and sufficient service upon Zurich.

Footnote 6:Prior thereto, plaintiff's counsel alleges that he was forced to appear on 3094 Brighton's behalf in the Haidear action, thereby incurring counsel fees and costs.

Footnote 7:According to plaintiff, although counsel represented that Brooks had retained them and paid their legal fees, Brooks refused to pay the cost to retain experts. Accordingly, 3094 Brighton alleges that it was required to advance $5,000.00 for the same, without prejudice, on notice to Zurich's counsel.

Footnote 8:Other than plaintiff's statement that it was unaware of the tenancy of the infant plaintiff at 3094 Brighton 5th Street, Apartment 5A, in Brooklyn, the Haider defendants adopt Brighton's statement of the facts.

Footnote 9:Zurich's motion also requests that the Court issue an order declaring that Brighton is required to provide the discovery within 10 days of service of the Court's Order, and that Brighton's complaint will be struck without need of further motion practice.

Footnote 10:Zurich also contends that plaintiff failed to attach a copy of the entire policy.