Stout St. Fund 1, LP v State Farm Fire & Cas. Co.
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Stout St. Fund 1, LP v State Farm Fire & Cas. Co. 2012 NY Slip Op 31227(U) April 24, 2012 Supreme Court, Nassau County Docket Number: 006283/11 Judge: Randy Sue Marber Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. ............... ..... """"'" ..... [* 1] SHORT FORM ORDER SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU Present: BON. RADY SUE MARBER TRIAL/IAS PART 14 JUSTICE STOUT STREET FUND 1 , LP Index No. 006283/11 Motion Sequence... , 02 Motion Date... 02/21/12 Plaintiff, -against- STATE FARM FIRE AND CASUALTY COMPANY, Defendant. Papers Submitted: Notice of Motion (Mot. Seq. 01)......................... Memorandum of Law.......................................... Notice of Cross- Motion (Mot. Seq. 02)............... Memorandum of Law. ..... Reply Affirmation................................................ Reply Affirmation................................................ Upon the foregoing papers , the motion , pursuant to CPLR 3212 , by the Plaintiff seeking summary judgment against the Defendant, State Farm Fire and Casualty Company (hereafter " State pursuant to CPLR 3212 , Far ) and the Cross-motion by the Defendant , State Farm seeking summary judgment dismissing the complaint are determined as herein provided. In this action, the Plaintiff, the named mortgagee/additional insured under a [* 2] policy of insurance (92- BK- G 100- 5) located at 17 Car Lane, Medford , issued by the Defendant , State Farm, on propert New York , seeks damages flowing from the Defendant, State Farm s alleged breach of contract and a declaration that the Defendant , State Far, obligated to provide fire insurance coverage with respect to the subject propert which was damaged in a fire on November 28, 2010. The Plaintiff alleges that , in reliance on a declaration issued by the Defendant State Farm , that propert known as 17 Carr Lane , Medford, New York was insured for the period December 12, 2009 to December 14 , 2010 , Stout Street Funding, LLC, the Plaintiff assignor, lent Sedberg Holding Corp. (Sedberg), the owner of the propert, $55, 000. s In accordance with such loan , Sedberg executed a note and mortgage in favor ofthe Plaintiff s assignor , dated December 15, 2009 , secured by the propert. Thereafter , Stout Street Funding, LLC assigned all of its rights under the note and mortgage to the Plaintiff. After the propert suffered damage in a fire , Sedberg submitted a claim to the Defendant , State Far. By letter dated January 13 , 2011 , the Defendant , State Farm , advised the Plaintiffthat: no coverage is available for the fire damage. . . as the Rental Dwellng Policy on this location was effectively cancelled as of July 4 , 2010 due to non-payment of premium. The letter further states as follows: Additionally, we have verified that notification of the policy cancellation was provided via written correspondence by our Underwriting Department to both Stout Street Funding and Sedberg Holding Corp. This cancellation notification was issued to you on June 2010. therefore, no payment can be made to you for this claim. The Plaintiff s motion for summar judgment against the Defendant, State [* 3] Farm , is predicated on the grounds that the Defendant , State Far , breached its contract with the Plaintiff by failng to provide insurance coverage on the subject propert for the applicable one year period as set forth on the Declaration. In this regard, the Plaintiff alleges that it has " no record of ever receiving a Notice of Cancellation of the Policy. " The Plaintiff further claims that it reasonably relied on the representation , set forth on the Declaration , that insurance coverage had been purchased. Moreover, the Plaintiff argues that it would not have lent money to Sedberg if it believed that the premium had not been paid. In support of its cross-motion for summar judgment dismissing the complaint the Defendant, State Farm , explains that Sedberg maintained six policies of insurance with State Farm for various properties including the propert at issue in this action. In May 2010 the Defendant , State Farm , mailed a bil to Sedberg requesting payment on its six State Farm policies for the outstanding premium of$4 554. 90. The Plaintiff was the listed mortgagee on each ofthe six accounts vis-a-vis Sedberg s policies. When the Defendant, State Farm, received no response to the outstanding bil , or any payment thereunder , the Defendant alleges it mailed a Notice of Policy Cancellation dated June 14 , 2010 to both Sedberg and the Plaintiff. It is undisputed that no payment was received from either the insured or the Plaintiff as mortgagee. As a result, the Defendant , State Farm , maintains that the policy was properly cancelled on July 4 2010. par seeking to recover for a loss under an insurance policy has the burden of proving that a loss occurred and that the loss was a covered event within the terms of the [* 4] Travelers Ins. Co. 252 A. 2d 569 (2 appeal denied policy. Gongolewski 92 N. 2d 815 (1998). Although the Plaintiff claims it detrimentally relied on the Defendant v. Dept. 1998) insurer s alleged "misrepresentation " as to the " scope of coverage " the allegation is made by the Plaintiff s counsel who has no personal knowledge of such reliance , only a familarity with the facts and circumstances gleaned from a review of the pleadings and proceedings. Counsel' s Affirmation , therefor , lacks probative value and is an insufficient basis on which to award summary judgment in the Plaintiffs favor. Dept. 2009). The affiant has no personal knowledge Shickler vis-a-vis v. Cary, 59 A. D.3d 700 (2 the Plaintiffs reliance on a representation of insurance coverage made by the Defendant , State Farm. Despite the Plaintiffs contention that the Premium Notice submitted , which lists the premium as $1 379 , and the amount paid as $1 379 , constitutes proof of fire insurance coverage, the notice states that: " This is the only notice you wil receive. Please make check payable to State Far and return it with this notice to the address shown below. Your cancelled check is your receipt" The Plaintiffhas failed to present a copy of the cancelled check and offers only an attorney s Affirmation in support ofits motion for sumar judgment. The Affirmation however , has no probative value on the issue of whether the Plaintiff relied on the Notice of Premium in issuing a mortgage to the owner ofthe propert or whether insurance coverage was actually purchased. Detrimental reliance is synonymous with equitable estoppel and is imposed law in the interest of fairness to prevent the enforcement of rights which would work fraud [* 5] or injustice upon the part against whom enforcement is sought and who , in justifiable reliance upon the opposing part' s words or conduct , has been misled into acting upon the belief that such enforcement would not be sought" Concrete Prods. Corp. 56 N. v. Nassau Trust Company Montrose 2d 175 184 (1982). There is no independent cause of action for detrimental reliance which is an element of equitable or promissory estoppel. Equitable estoppel prevents a part from denying its own express or implied admission which has, in good faith, been accepted and acted upon by another. The elements of estoppel are, with respect to the part estopped: 1) conduct which amounts to a false representation or concealment of material facts; 2) intention that such conduct wil be acted upon by the other part; and 3) knowledge of the real facts. The part asserting estoppel must show that: 1) it lacked knowledge of the true facts 2) it relied upon conduct of the par estopped; and 3) it experienced a prejudicial change in position. Niagara Mohawk Power Corp. 76 A. Airco Alloys Div. 2d 68, 81 (4th Dept 1980). Here, the Defendant insurer maintains that the policy of insurance under which the Plaintiff claims coverage was cancelled on July 4 , 2010, four months prior to the fire. As such , policy. the Defendant , State Farm, bears the burden of proving timely cancellation of the Tobia v. Liberty Mut. Fire Ins. Co. 70 A. D.3d 928 (2 Dept. 2010). [* 6] An insurer is entitled to a presumption that a cancellation or disclaimer notice was received when " the proof exhibits an office practice and procedure followed by the insurers in the regular course of their business , which shows that the Notices of Cancellation have been duly addressed and mailed. Nassau Ins. Co. v. Murray, 46 N. 2d 828 , 829 (1978). In order for the presumption to arise " office practice must be geared so as to ensure the likelihood that a Notice of Cancellation is always propert v. Liberty Mut. Fire Ins. Co. An insured' s addressed and mailed. Radio 12 A. D.3d 229 229- 30 (pt Dept. 2004). denial of receipt , standing alone , is insufficient to rebut the presumption. " In addition to a claim of no receipt, there must be a showing that routine office practice was not followed or was so careless that it would be unreasonable to assume that the Notice was mailed. Nassau Ins. Co. v. Murray, supra at p. 830. No such showing has been made here. Here, the Defendant , State Farm , has met its burden by submitting the affidavit of a supervisor at the Insurance Support Center (ISC) whose duties include the supervision of the manual handling function in the Printing, Inserting, Mailng Center within the ISC who attests to the standard operating procedure vis-a-vis the issuance of cancellation notices sent to State Farm policyholders. The Defendant also submits the affidavit of the general manager of Pitney Bowes Presort Services , Inc. (PBPS) who confirmed the process PBPS uses to effectuate delivery of mail that comes into its possession from State Farm. Under the circumstances extant , the Plaintiff s allegation that it never received the Notice of Cancellation the Defendant alleges was sent to the Plaintiff and Sedberg, [* 7] without more, is insufficient to rebut the Leatherstocking Coop Ins. Co. 52 A. presumption of 2d 1010 , 1012 (3 mailing. Kaufman Dept. 2008). By establishing its routine and reasonable office practice regarding the mailng of cancellation notices , the Defendant met its burden of proof establishing that notice was actually mailed to the Plaintiff and presumed received. The burden then shifted to the Plaintiff to rebut the presumption of receipt. The Plaintiff has failed to satisfy this burden. Accordingly, it is hereby ORDERED , that the Plaintiffs motion (Mot. Seq. 01) seeking summary judgment is DENIED; and it is further ORDERED , that the Defendant's Cross-motion (Mot. Seq. 02) summary judgment and declaring that the Defendant , State Farm is not obligated to provide insurance coverage with respect to propert located at 17 Car Lane , Medford , New York which was damaged in a fire on November 28, 2010 is GRANTED. This constitutes the Decision and Order of the Court. All applications not specifically addressed are DENIED. DATED: seeking Mineola , New York April 24 , 2012 Hon. Rand)J ENTERED APR 26 2012 NASSAU COUNTY COUNT CLERK' S OFFICE
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