M.V.B. Collision Inc. v Allstate Ins. Co.

[*1] M.V.B. Collision Inc. v Allstate Ins. Co. 2009 NY Slip Op 51580(U) [24 Misc 3d 1223(A)] Decided on July 16, 2009 District Court Of Nassau County, Second District Ciaffa, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 16, 2009
District Court of Nassau County, Second District

M.V.B. Collision Inc. D/B/A MID-ISLAND COLLISION A/A/O ROBERT HICKEY, Plaintiff,

against

Allstate Insurance Company, Defendant.



22783/08



Steven F. Goldstein, LLP 1 Old Country Road, Suite 430, Carle Place, NY 11514, Attorney for Plaintiff

Marjorie E. Bornes, Esq. 330 West 34th Street, 7th Floor, New York, NY 10001, Attorney for Defendant

Michael A. Ciaffa, J.

Motion by defendant for reargument of the Court's decision and order dated June 10, 2009, is DENIED. Defendant's motion fails to show that the Court overlooked or misapprehended any material matters of fact or law. See CPLR 2221(d).

To the extent defendant's motion seeks the Court's guidance respecting the burden of proof at the champerty hearing and a ruling respecting its right to obtain pre-hearing discovery, the motion is GRANTED.

The applicable precedents do not clearly answer the question of which party has the burden of proof at a hearing respecting a champerty defense. One early case, decided in 1846, suggests that the plaintiff carries the burden "to repel the presumption" that the transaction was champertous. See Evans v. Ellis, 5 Denio 640, 645 (Sup Ct 1846). On the other hand, under generally applicable procedural rules governing affirmative defenses, see CPLR 3018(b), "champerty" appears to be the sort of defense that defendant must plead and prove to defeat plaintiff's action. Cf. LNC Investments, Inc. v. First Fidelity Bank, 2000 WL375236 (SDNY 2000) (defendant has burden of proving affirmative defense of champerty under Fed. R. Civ. P 8[c]).

Assuming, arguendo, that the latter rule applies, the Court nonetheless concludes that defendant can satisfy its threshold burden by introducing proof of the facts set forth in its initial moving papers. Those facts, as the Court implicitly found in its decision, are sufficient to raise the inference of a champertous intent. But once defendant meets that threshold burden - - a relatively easy task - - the burden will shift back to the plaintiff to rebut the inference by coming forward with proof that "some purpose other than litigation induced plaintiff to obtain the assignment." Decision and [*2]

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INDEX 22783/08

M.V.B. COLLISION V. ALLSTATE

order, p.3.

The burden-shifting protocol I have outlined makes practical sense in light of the

competing principles and values which underlie the champerty statute and applicable judicial precedents. Consistent with the limitations placed on the defense by the Court of Appeals, the party seeking immunity from a "champertous" suit must properly make a threshold evidentiary showing of facts suggesting that plaintiff acquired the claim for the sole or primary purpose of bringing suit on the claim. But since the "intent" of plaintiff in acquiring the claim must typically be determined based on "a weighing of [the] evidence" and the Court's evaluation of the credibility of material witnesses, see Bluebird Partners, L.P. v. First Fidelity Bank, N.A., 94 NY2d 726, 738 (2000), the Court's burden-shifting analysis properly places upon plaintiff the ultimate responsibility for coming forward with evidence at the hearing that "some purpose other than litigation induced plaintiff to obtain the assignment." See decision, p.3; see generally 57 NY Jurisprudence 2d, Evidence, §161 .

Finally, in order for the parties to fully prepare for a hearing on these issues, the Court determines that pre-hearing discovery is appropriate and warranted. As defendant has requested, the scope of such discovery shall be addressed at the next Court conference, to be held on August 19, 2009.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: July 16, 2009

CC:Steven F. Goldstein, LLP

Marjorie E. Bornes, Esq.

MAC:ju