Maldonado v State Farm Mut. Auto. Ins. Co.

[*1] Maldonado v State Farm Mut. Auto. Ins. Co. 2009 NY Slip Op 50412(U) [22 Misc 3d 1133(A)] Decided on January 15, 2009 Civil Court Of The City Of New York, Queens County Pineda-Kirwan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 15, 2009
Civil Court of the City of New York, Queens County

Liljohn Maldonado & Luis Acevedo, Plaintiff(s),

against

State Farm Mutual Automobile Insurance Company, Defendant(s).



54470/08



Plaintiffs' attorneys - Jose R. Mendez, P.C.

Defendant's attorneys - Picciano & Scahill, P.C.

Diccia T. Pineda-Kirwan, J.

The plaintiffs commenced a prior action against defendant's insured, David Simmons, for personal injuries that were allegedly caused by an automobile accident that occurred on November 21, 2003. On March 3, 2008, after David Simmons failed to appear or answer the complaint, the matter was set down for an inquest hearing on damages, and the plaintiffs were awarded judgment for $25,000. On March 7, 2008, the plaintiffs served the defendant State Farm Automobile Insurance Company (State Farm) with the underlying judgment and notice of entry, which is evidenced in an affidavit accompanying plaintiffs' motion. Since the judgment remained unpaid for 30 days subsequent to service of it with notice of entry, plaintiffs commenced this cause of action pursuant to Insurance Law § 3420(a)(2) to recover the amount of the underlying judgment obtained against State Farm's insured.

On July 9, 2008, State Farm sent a letter to David Simmons and plaintiffs' counsel disclaiming coverage due to violations of the policy provisions. In the letter, State Farm alleged that it first became aware of the underlying cause of action by service of the summons and complaint of the instant action. The letter went on to allege that State Farm never received the judgment obtained by the plaintiffs in the underlying cause of action. Additionally, the affidavit of defendant's employee, Justine Sinkler, stated that State Farm was apprised of the automobile accident in 2004, but that it never received notice of the judgment in the underlying cause of action. Ms. Sinkler further averred that State Farm became aware of the judgment when the instant summons and complaint was served on June 27, 2008, and it promptly apprised the plaintiffs in its July 9, 2008 letter that State Farm was disclaiming coverage.

An injured claimant has an independent right to seek coverage under a policy of insurance, regardless of whether the insured complied with its coverage provisions. (General Acc. Ins. Group, 46 NY2d 862 [1979].) Therefore, the only issues for the court to determine on the instant motion [*2]and cross-motion are when State Farm was put on notice of the underlying judgment against its insured, and whether it timely notified the plaintiffs that it was declining coverage due to its insured's violations of the policy agreement.

First, the plaintiffs served the underlying judgment with notice of entry by mailing it to defendant's office on March 7, 2008, as evidenced in the affidavit of service of Wilfredo Bonilla. While defendant submits the affidavit of Justine Sinkler as proof that it did not receive the underlying judgment, "a properly executed affidavit of service raises a presumption that a proper mailing occurred, and a mere denial of receipt is not enough to rebut the presumption." (Kihl v Pfeffer, 94 NY2d 118 [1999].) Accordingly, the denial of receipt by Ms. Sinkler is not enough to create an issue of fact as to when the judgment with notice of entry was received by the defendant. (Kihl, 94 NY2d 118.) Thus, as a matter of law, the defendant was put on notice of the underlying judgment on March 7, 2009.

Second, it must be determined whether State Farm's July 9, 2008 letter disclaiming coverage complies with the statutory requirement of disclaiming coverage "as soon as reasonably possible." (Insurance Law § 3420(d).) The Court of Appeals determined in First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64 [2003], that "once the insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage," it must notify the party seeking the benefit of the policy coverage in writing as soon as reasonably possible. Timeliness of an insurers disclaimer is measured from the time when the insurer first learns of the grounds for denial of coverage. (First Fin. Ins. Co., 1 NY3d 64; Moore v Ewing, 9 AD3d 484 [2004].) Here, State Farm was aware that it was going to disclaim coverage once the underlying judgment was served upon it, as its reasons for disclaiming coverage were based on its insured's failure to forward suit papers in the underlying cause of action. Thus, State Farms unexplained delay in disclaiming coverage for over four months after it had "sufficient knowledge of facts entitling it to disclaim" is unreasonable as a matter of law. (First Fin. Ins. Co., 1 NY3d 64; Matter of Allstate Ins. Co. v Swinton, 27 AD3d 462 [2006]; Shell v Fireman's Fund Ins. Co., 17 AD3d 444 [2005]; Vacca v State Farm Ins. Co., 15 AD3d 473 [2005]; Moore, 9 AD3d 484.)

Accordingly, for the foregoing reasons, the plaintiffs' motion for summary judgment is granted, and the defendant's cross-motion for summary judgment is denied.

This constitutes the decision and the order of the Court.

Date: January 15, 2009_________________________________

HON. DICCIA T. PINEDA-KIRWAN

Judge, Civil Court