Li-elle Serv. Inc. v AIU Ins. Co.
Decided on April 20, 2009
Civil Court of the City of New York, New York County
Li-elle Service Inc. Assignee of Jorge Garcia, Plaintiff(s)/Petitioner(s),
AIU Insurance Company, Defendant(s)/Respondent(s).
74171 CVN 2007
Attorneys for the Plaintiff
By: Michael C. Rosenberger, Esq.
Law Offices of Bryan Rothenberg
Attorneys for the Defendant
By: Kenneth F. Popper, Esq
Manuel J. Mendez, J.
Defendant AIU Insurance Company, moves for summary judgment pursuant to CPLR §3212 alleging there exists no triable issues of fact because the underlying policy was retroactively cancelled and deemed void ab initio, based on a material misrepresentation in the insurance application, pursuant to the terms of the policy and under Virgina Law. This is an action to recover no-fault benefits for services from a transportation company rendered to the assignor.
Plaintiff opposes the motion and claims that it is error to hold that a policy obtained using
fraudulent misrepresentations could be void ab initio as indicated in Vehicle and Traffic Law
§313. Plaintiff also claims that the defendant has not offered sufficient proof that the
misrepresentation was material such that the insurer would refuse to make such a contract and
[*2]provided no affidavit by an individual with personal
knowledge of the investigation.
Defendant issued a policy to the assignor, Jorge Garcia for a 1995 Dodge Caravan on or about April 21, 2007. At that time he listed his address as 424 Cornwallis Court, Ashland, VA 23005. The defendant claims that Jorge Garcia indicated on a residency request letter dated August 13, 2007, the car was garaged in Virginia, and that he had not changed his residency since he applied for the policy (a copy of the letter is annexed to the motion papers as part of "Exhibit E"). The policy issued contains specific language which the defendant alleges resulted in the policy being void ab initio as a result of the misrepresentations ( certified copy of the policy is annexed to the motion papers as part of "Exhibit C").
Pursuant to its investigation of the claim regarding the accident of July 7, 2007, defendant
held an Examination Under Oath and determined Jorge Garcia had been living in Bronx, New
York and not Virginia at the time he signed the closing statement. The defendant cancelled the
policy ab initio via letter dated October 24, 2007, with the rescission effective fifteen days from
the date of receipt.
In order to prevail on a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence, eliminating all material issues of fact. Id.; Klein v. City of New York, 89 NY2d 833, 834-35 (1996) Ayotte v. Gervasio, 81 NY2d 1062, 1062 , Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986) Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985), Zuckerman v. City of New York, 49 NY2d 557, 427NYS2d 595 (1980). Once the moving party has satisfied these standards, the burden shifts to the opponent to rebut that prima facie showing, by producing contrary evidence, in admissible form, sufficient to require a trial of material factual issues. Kaufman v Silver, 90 NY2d 204, 208 [*1997]; Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533-34 (1999); Iselin & Co. v Mann Judd Landau, 71 NY2d 420, 427 . In determining the motion, the court must construe the evidence in the light most favorable to the non-moving party. (SSBS Realty Corp.v. Public Service Mut. Ins. Co., 253 AD2d 583, 584-85 [1st Dept. 1998]; Martin v. Briggs, 235 AD2d 192, 196 [1st Dept., 1997]).
A conflict of law dispute concerning an insurance policy is resolved by application of the conflict of law rules that apply to contracts. Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, 721 NYS2d 660 [N.Y.A.D. 2nd Dept. 2001]. The test to determine which state law governs involves the "grouping of contacts," the state with the most significant contacts to the dispute has the law which governs the outcome of the dispute. Eagle Insurance Co. v. Singletary, 279 AD2d 480, 717 NYS2d 351 [N.Y.AD2d Dept. 2000]. It has been held that "significant contacts" regarding an insurance contract include, "the place of contracting, ... the place of negotiation and performance, the location of the subject matter of the contract and the domicile or place of business of the contracting parties." Jones v. AIG Insurance Co., 15 Misc 3d 1123(A), [*3]841 NYS2d 219 [Sup. Ct. Queens County 2007], Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, supra , and Eagle Insurance Co. v. Singletary, 279 AD2d 480, supra .
The Appellate Division, Second Department, in Eagle Insurance v. Singletary, 279 AD2d 480, supra ,in a factual situation similar to that of the instant action, determined that New York's governmental interests needed to be balanced against the significant contacts with Virginia. In finding that Virginia law applies, the Court identified Virginia as the location where the contract of insurance was negotiated and obtained by parties doing business and expected to reside in that state and there was an expectation that the vehicle would be garaged there, so that it had the most contacts. The Court also determined this interest takes precedence over New York State's interest in protecting innocent third parties from denial of insurance coverage.
The policy in this action involves a company doing business in Virginia and an individual representing at the time the contract was entered into in Virginia, that he was a resident of that state. There are significant contacts with Virginia so that the law of that state applies to this action.
The Virginia Code §38.2-309, titled, "When answers or statements of applicant do not bar recovery on policy," specifically states,
"All statements, declarations and descriptions in any application for an
insurance policy shall be deemed representations and not warranties.
No statement in an application or in any affidavit made before or after
loss under the policy shall bar recovery upon a policy of insurance unless
it is clearly proved that such answer or statement was material to the risk
when assumed and was untrue."
The Supreme Court of Virginia, has interpreted the statute to apply to insurance companies contesting a claim on the basis of an insured's misrepresentation and developed a two part test. The insurer is required to demonstrate,
"(1) that the statement or omission on the application was untrue
(2) that the insurance company's reliance on the false statement
or omission was material to the company's decision to
undertake the risk and issue the policy."
It is not enough to prove a falsity, the insurer is required to clearly prove that the untruthful answers would have reasonably influenced the company's decision to issue the policy. See Commercial Underwriter's Insurance Company v. Hunt & Calderone, P.C., 261 Va. 38, 540 S.E. 2d 491(2001) and Montgomery Mutual Ins. Co. v. Riddle, 266 Va. 539, 587 S.E. 2d 513 (2003). [*4]
The defendant provides the Examination Under Oath
(EUO) transcript of Jorge Garcia,
dated September 24, 2007 (annexed as "Exhibit D" to the motion papers), as proof of the material misrepresentation. Mr. Garcia states that although he was residing in New York at the time he entered into the policy in Virginia, he only worked and lived in New York and worked in a delicatessen for part of the year, and he would return and reside in Virginia during the summer when he did construction work. (EUO Transcript at pages 37-39) . Mr. Garcia also indicates that he had inquired of the person filling out the application for his policy, if he could change the listed address and was advised that he would have to wait until some bills arrived, and that since he was planning to return to Virginia he did not change the address. He indicates he was advised that a New York policy would be more expensive but that was not a factor in his decision to keep the address listed as Virginia (EUO Transcript at pages 51-52). The defendant also annexes the affidavit of Fae Pitts, an Underwriter III by AIG Marketing Inc., (annexed to the motion papers as "Exhibit E") she bases her knowledge on a review of the records and indicates the policy was cancelled retroactively based upon material misrepresentations. Fae Pitts does not provide sufficient details as to the reliance on the misrepresentations being material to the company's decision to undertake the risk. There is no statement from the individual responsible for filling out the insurance application or sufficient proof to confirm or deny the statements made by Jorge Garcia regarding dual residency.
This Court finds there is a conflict of law between Virginia and New York, and Virginia law prevails. Defendant has not met its burden of proof sufficient to obtain summary judgment concerning whether the policy was void ab initio. Defendant has provided proof that Jorge Garcia provided misrepresentations on his insurance policy, but has not clearly established that it relied on those misrepresentations when it undertook the risk or that truthful answers would have influenced the insurer's decision to issue a policy. It is unclear based on the EUO testimony of Jorge Garcia, whether the individual responsible for preparing the application on behalf of the defendant was aware of the misrepresentations and continued have the policy issued. The defendant has not met its burden of proof, there is no need to address the deficiencies in the plaintiff's papers.
Accordingly, for the foregoing reasons the defendant's motion for summary judgment is denied.
The foregoing shall constitute the Decision and Order of the Court.
Dated: April 20, 2009
Manuel J. Mendez
Judge, Civil Court