Allsta, Inc. v CNA Commercial Ins.

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Allsta, Inc. v CNA Commercial Ins. 2012 NY Slip Op 33464(U) May 2, 2012 Sup Ct, Bronx County Docket Number: 306489/2011 Judge: Alison Y. Tuitt Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] FILED May 08 2012 Bronx County Clerk ' NEW YORK SUPREME COURT- COtJNTY OP Bl'.ONK / C..Dlap11111d s...ie~ SlJPllEME COURT OF 'l1IB STATE OF NEW YOH COUNTY OF B1lONX: Q Q ScWuJe.AHA ----------------------------X IQ J111tiaa. . The lllowing 111y1 ¢ ¢id 1 to Jtmdcmlliamdi ¢ ¢ Nodcedcm r1I~ 11 IDd .a....L~mllllilllll ¢No. . . . Maciim Cllmdlrof I J11a1ice afMacian ¢ Oldlr tD Sllow Cw. E ...._ . . Allldnil ... 1' I iA ..i.&111 ".ill A 11/2-1/11 l'l'"WN ¢llR I 2-. <\ I L/ WW... ~:~ _,' ~· °l ¢ FIJlillAlll 1itml.....a ¢ ¢ ¢ I A. .111 . . 1111 I Pl I I - Blllllit Slip I 111111(1) ¢ . . _ . . llpon ¢ 1111 --- .......... M I ofl.aw ....-----.~-~; '1~~jll,{/w~~~~ lfloUJ 2-1 2-J/L a I I .!! Hon.~7-~LP=J.S.C ALISON '(;;TUITT [* 2] Fl.LED May 08 2012 Bronx County Clerk (\ I I NEW YORK SUPRE\1E COURT----------COUNTY OF BRONX PART / IA - 5 \A.hLS;A, INC., INDEX NUMBER: 306489/2011 Plaintiff. Present: IION. ALISON Y. TUITT Justice -against- CNA COMMERCIAL INSLrRANCE and NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Defendants. The following papers numbered 1-9. Read on this Plaintiffs Orders to Show Cause and Defendants' Motion to Dismiss On Calendar of I 1121/11 Orders to Show Cause/Notice of l\1otion-Exhibits. Affirmations. Affidavits._-'1~2~.~3__ Affirmations in Opposition, _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _4-'·~·"-5~.6"-Reply Affirmations. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-'7~·~8'-'-'9__ Upon the foregoing papers. plaintiffs Orders to Show Cause dated July 21. 2011 and November 2. 2011. and defendants motion to dismiss are consolidated for purposes of this decision. For the reasons set forth herein. plaintiffs Orders \0 Show Cause arc both denied and the temporary restraining orders are hereby lifted: and. defendants' motion to dismiss the complaint is granted. PlaintiffAllsta. Inc. (hereinafter '·Atlsta") brings the instant Order to Show Cause seeking a temporary restraining order (hereinafter "TRO"). prdirninary injunction. and specific performance which was signed by Justice Mark Friedlander on July 21. 2011. The Order to Show Cause contained a TRO restraining and prohibiting defendants frun1 tern1inating. cancelling. n1odifying or consumrnating any transaction involving its insurance coverage of Allsta. The restraining order was to remain in effect until the oral argument of the [* 3] FILED ,..,-,......-, May 08 2012 Bronx County Clerk Order to Show Cause which was scheduled for August 1, 2011 but was thereafter adjourned to August 22. 2011. On August 18. 201 L counsel for dd'endants served opposition to plaintiff's Order to Show Cause and filed a Motion to dismiss the complaint pursuant to CP.L.R. §3211 and/or §3212. On August 22. 201 J, September 12. 2011. October 12. 2011. the parties appeared before the Court. During the conferences. counsel for National did not advise that on August 17. 2011. it had submitted to the Department of Motor Vehicle (hereinafter "DMV") cancellation notifications advising that the insurance for the Allsta vehicles should be cancelled effective October 4. 2011. On October 23, 2011, Alls ta learned that National cancelled the insurance policy. Consequently. Dt\IY suspended the registration ofA\lsta's 79 vehicles. Thereafter. plaintiff filed a second Order to Show Cause for contempt or court and a further TRO. which sought. pending a hearing on the motion. to temporarily restrain and preliminarily enjoin defendants from '·further violating the Julv 21. 2011 Ordd' and directing defendants to '"immediate\v,,, reinstate ... .. ~ each and every insurance policy" ofplaintiff"which was the subject to [sic] the July 21, 2011 Order". This Court signed the Order to Shuw Cause with TRO on Novemher 2. 2011. pending oral argument on the motion which was schedu\cd for l'o,·cmbcr 7. 20 I I but was adjourned to November 21, 20 l 1. There arc currently three motions before the Court. The tirst two are plaintiffs Order to Show Causes with TRO's. The third is defendants' motion to dismiss the complaint. The Court will address all three motions here. In support of its first Order to Show Cause, plaintiff submits the affidavit of Dan Silverman, the insurance broker for plaintiff. \\ho brokered an insurance policy between plaintiff and defendant CNA Commercial lnsurance (hereinaticr "CNX'). \Ir. Silverman states that on September 24, 2010. he accepted from plaintiff a check in the amount of S 13, 941 .00 as a deposit for insurance coverage for the vehicles used in its limousine business. An application for such coverage was accepted by defendants. At the time of the writing of the policy. plaintiff had placed 27 cars on the policy. The policy was placed with defendant National Fire Insurance Company of l lartford (hercinatter "'iationa\"). a subsidiury of defendant CNA and assigned Policy \lumber 4028641242. 13oth CJ\A and 'iation:li are insurance companies licensed to conduct business in the State of New York. \Ir. Silverman further states that during the life of the policy, plaintiff added approximately 52 cars for which additional premiums were charged and paid. Mr. Silverman states that over the course of the [* 4] ¢ FILED May 08 2012 Bronx County Clerk policy. plaintiff made timely payments as required under the policy agreement and paid additional premiums due on the added vehicles. Mr. Silwrman alleges that from the policy"s inception it was known to the defendants that the subject v·ehielcs were garaged at the plaintiffs place of business located at 69-20 48'" /\venue. in Woodside. Queens. New York. Mr. Silverman states that he personally visited the garage and noted the presence of the subject vehicles inside the garage. Mr. Sih·crman alleges that dekndants were aware that plaintiffs mailing address was located in Amenia. >Jew York. The policy issued to plaintiff by defendants contains a standard provision which states that ··r w]hcn this policy is in effect less than 60 days we may cancel the entire policy for any reason provided we mail you notice within this period."" Further. the policy also states that after the policy has been in effect for more than that same 60 day period the policv may only be cancelled for a reason that is provided in an exhaustive list. Those reasons arc limited to failure to pay a due premium. the expiration, suspension or revocation of the licenses of the various drivers. the defendant replaces the policy with one that is substantially similar. the policy has no expiration date. or the policy was obtained under a fraudulent premise or fraudulent claims were made. Plaintiff argues that defendants were afforded clmple opportunities to conduct due diligence during the initial 60 day period and did not raise any question or exercise any right of cancellation during that period. The 60 day period is purported!' a national standard recognized in the insurance industry. Plaintiff contends that none of the conditions for canccllatiun alter the expiration of the 60 day period exist and the plaintiff has substantially performed its obligations under the insurance contract and has paid the premiums due for the entire year on all covered vehicles. In opposition to plaintiffs first Order to Show Cause. defendants argue that it had multiple compelling reasons for canceling plaintiffs policy. Defendants" counsel also represents Continental lnsurance Company (hereinafter '·Continental"'). a separate company from National, but the entities are related. Defendant states that Continental filed suit two years ago. represented by defendants· law firm herein, in the Cnited Stated District Court for the Eastern District of'-Jew York against numerous entities and persons including first two named defendants Securi Enterprises. Inc. (hcreinatier ··securi"") and Scott Sanders (hcrcinatier "'Sanders"") for alleged fraud and RICO violations relating to fraudulent autnn10bile insurance schemes. Jn or about !\ovember 20 I 0. defendants Securi and Sanders filed a motion to stay Contincntal"s _, ' [* 5] FILED May 08 2012 Bronx County Clerk suit in order to prevent Sanders from providing deposition testimony due to a pending criminal investigation of him by the United States Attorney for the Southern District of?\ew York. A copy of the anidavit of.lcffrcv Hoflinan. Esq. (hereinafter ··!-Joftinan Affidav it""J sworn to on !\ovember 1 I. 20 I 0 shows that one target of the U.S. Attorney's investigation. and connected to Sanders. is Prime Services Enterprises, Inc. (hereinafter "Prime Services") located at 69-20 48'" Avenue. in \Voodside. Queens. New York. the address ofplaintiffherein. The Continental complaint against Sanders and other details a fraudulent scheme relating to the procurement of insurance coverage fcH· Sccuri_ a ··con1put~r salL'S and s~rvice con1pany in Ne\v ,Jersey" \Vhcn_ in fact. Sanders was operating a taxi sen ice. or v·ehicles for hire service in or about New York City. It is alleged that the true nature of Securi was not discovered until third party claims were submitted. None of the claims were reported by Securi itself. Defendants argue that here, after National issued an insurance policy to plaintiff: numerous accidents began to "surface". none of which were reported to National b;; plaintiff Allsta and none of which Sanders, the supervisor for plaintiff. updated \\ith any information even after National asked Sanders for information. Even more troubling. argue defendants. is that plaintiffs address on the National policy, also admitted to be the Allsta's address by plaintiffs insurance agent !\fr. Silvennan. is the same address for Prime Services. which per the Hoffman i\ffidav·it. 1v-as subpoenaed hy the U.S. ;\ttorncv in March 2009. and which is the entity that issued a multitude of premium payment checks for plaintiff i\llsta. Defendants ask the Court to take judicial notice that Mr. Silverman admits that plaintiffs mailing address is in Amenia. New York. also the address of targets of the U.S. Attorney per the Hoffman Affidavit. National also asks this Court to consider the affida1it of Rebecca .I. Larsun. a consulting underwriting director for National. which details a "dizzying. non-stop array of premium non-payments and policy changes" after National issued this policy. such that Allsta. which began by asking National to issue a policy for only 27 vehicles, ultimately wanted coverage for 79 v chicles, which defendant argues clearly constitute a material change in the policy more than justifying cancellation ev-en without the '·alarming"" involvement of Sanders. as plaintiffs principal. National also requests that this Court take into account the December 28, 2010 order of Judge Mary Cooper. United States District CourL District of i\c11 Jersey, which reflects that the Securi defendants, including Sanders. may or may not be indicted and arc the subject of a criminal investigation. Defendants argue that this Court was unmvare of plaintiff Allsta's connections to Sanders when, by order dated July 26. 2011. the Court granted temporary relief to Allsta. rcstrnining National from terminating,. canceling or [* 6] FILED May 08 2012 Bronx County Clerk modifying its insurance coverage for Allsta until the return date of the Order to Show Cause. With reference to the material changes that defendants argue fully justified the cancellation of the policy, the following is the relevant history: c;ational issued a business auto policy to Allsta with effective dates of October 4. 20 I 0 to October 4. 2011. :'<ational argues that it had no basis to know at the time of the issuance of the policy of the connections between Alls ta and Sanders and others purportedly involved in criminal insurance scheme activitv. The Allsta policy was cancelled effective July 24. 2011. As stated by Ms. Larson in her affidavit. the reason for the cancellation was "'material change in the nature and extent of the risk beyond that originally contemplated. Defendants argue that even without the fraud issues, there is no question that as a matter of law. it is .. material .. to hcl\"e a policv change from co,·ering 75 automobiles instead of27, i.e. a change in the size of the risk by JOO%. not even tciking into account the manner of the sometinws almost- weekly changes in the addilions and subtraclions of' chicles for which coveragL' was sought. Ms. Larson sets forth that Alisia began adding \chicles to the policy while repealedly not paying lhe premium due in ti.JI!. and purportedly using a potential criminal entity. Prime Services. to make payments. The dates and number of ,-ehic!es added are: October 22, 20 I 0 - 5 vehicles January 14, 2011 - I 0 vehicles March 16. 20 I l - 15 vehicles April I. 2011 - 15 vehicles (deleted I \Chicle) \1ay 26, 2011 - 7 vehicles With each addition of \'ehicles. the premium was recalculated and submitted to Allsta. However. due to the fact that Allsta elected to remit premium payments on an installment basis. Allsta was constantly in arrears with its premium payments. Consequently. \!ational issued six cancellation notices for nonpayment of premiums as follows: January 18. 2011 - effective cancellation date: Februan 6. 2011 February 16. 2011 - effective cancellation date: March 7. 2011 March 16, 2011 - effective cancellation date: April 4. 2011 April 19, 2011 - effective cancellation date: i'v!ay 6. 2011 May 24. 2011 - effcctiv-e cancellation date: .lune 12. 2011 .lune 23. 2011 - effecti\c cancellation date: Jul\" 12. 2011 5 [* 7] FILED May 08 2012 Bronx County Clerk Premium payments were 111adc against the tirst li\'e notices which reinstated the policy. On June 30. 201 l, National issued a cancellation notice. effective July 24. 201 l pursuant to New York Department of Insurance Regulation 2.e. as to a "'material change in the nature and extent of the risk beyond that originally contemplated."" Ms. Larson states that the material change that caused the cancellation of the policy was a tripling of the amount of vehicles from tk time the policy was issued to May 26. 2011, the last date Allsta added automobiles. National argues that it would not have issued this policy if it had known that the automobiles would be added over the life of the policy resulting in the insuring of79 automobiles. National further argues that the additional im olvement of persons and/or entities who have been or are being investigated for insurance rraud are grounds to deny plaintiffs request for an injunction. since plaintiffs contention that Sanders, its apparent principal. shcl\\s that there is a high risk to \!ational. in that forcing National to continue to cover plaintiff. this will help in the continuation of the fraudulent insurance scheme. In its second Order to Show Cause. plaintiff argued that defendants wrongfully, and contrary to this Court's Order dated July 21. 2011. terminated plaintitrs insurance policy on October 4, 2011, the date the policy was to end. Plaintiff argues that as a result. it has been forced to remove approximately 79 limousines from service in New York City and its business is failing. i\dditionally. the DMV is fining the plaintiff$8.00 per day per vehicle. or $642.00 per day. as a penalty for being uninsured. Plaintiff argues that it is also unable to ohtain insurance because of defendants' failure to provide plaintiff with documents legally necessary to acquire other insurance coverage. Plaintiff claims to be suffering actual losses of$25.000 per day as a result of not being able to legally have the 79 vehicles on the road. Plaintiff argues that National· s cancellation of the policy while the TRO was in effect from the first Order to Show Cause is subject to civil and criminal conternpt. Plaintiff further argues that National wilfully and deliberately violated the TRO and requests that the Court direct l'\ational to immediately reinstate plaintiffs insurance policies retroactive to the date of cancellation. In opposition. defendants argue that the objective ofplaintilrs first Order to Show Cause and the Order issued vvas to preserve the status quo vvith respect to Allsta"s coverage under the policy and to enjoin l\ational from taking any steps in lurther:tncc of its planned .lulv 24. 2011 mid-term cancellation of the policy. Defendants further argue that Alls ta ¢ s second Order to Sho\\ Cause attempts to misconstrue the true nature of the policy"s October 4, 2011 expiration by suggesting that l'\ational '·canccllcJ"" the policy. However, by its (J [* 8] FILED May 08 2012 Bronx County Clerk terllls. the policy was scheduled to expire on October 4. 2011. As alleged in Allsta"s own colllplaint. the policy was to have '"a policy effective date of October 4. 20 I 0 and tcrlllination date of October 4. 2011.'" Defendants contend that while Allsta·s complaint ultimately seeks to compel specilic performance of the policy"s terms. A llsta · s second Order to Show Cause no" seeks extra-contractual relief in the form of insurance coverage for periods beyond that which were contract for and for which premiums were paid under the policy. Defendants argue that the so-called October -l. 2001 '·cancellation"" was tantamount to Nations·s election not to renew Allsta"s co\'erage following scheduled and agreed-upon expiration of the policy at the encl of its terlll. Jn that respect. contend defendants. the relief nll\\ sought by Allsta would not result in a '"reinstatement'" of the policy. as suggested by Allsta. but the issuance of an entirely new contract to insure Allsta for losses occu1Ting after the October -l. 20 I I expiration of the policy. That relief was not sought in plaintiffs complaint and was not contemplated in the Order. Defendants further argue that the instant dispute revolves around National's planned July 24. 20 I I mid-term cancellation. The July 2 I. 200 I Order enjoined National from carrying out that cancellation until a hearing on the merits could be had. The issue as to the \alidity of'.\Jational's August 2011 notices to DMV and its nonrenewal of the policy upon its expiration could not ha1e possibly been in dispute when the Order was issued on Julv 21. 201 I. Defendants contend that the only issue in dispute then. as now. was whether National was entitled to cancel the policy effective July 2.:1. 2011 or whether the policy must have remained in effect for the entire policy period and expire on October -l. 2011. As such. National"s nonrenewal of the policy was not the type of conduct contemplated or prohibited hy the Order. !\lternatively. to the extent that the policy was to expire on October -l. 2011. the notices to LJJ\1\! indicating that the policy would be cancelled effective October 4. 2011 were a nullity and had nu effect on Allsta"s rights and obligations under the policy. Insurance Law ~3-l26(c)( I )(E) states: ( c) Atier a covered policy has been in effect for 60 days unless canceled pursuant to subsection (h) of this section. or on or aficr the effective date if policy is a renev.;al, no notice of cancellation shall become effective until fifteen days atier written notice is mailed or delivered to the first named insured and to such insurcd"s authorized agent or broker. and such cancellation is based on one or more of the following: 7 [* 9] FILED May 08 2012 Bronx County Clerk a. With respect to covered policies: (E) ... or material change in the nature or extent of the risk. occurring a tier issuance or last annual renewal anniversary date of the policy. which causes the risk of loss to be substantially and materially increased beyond that contemplated at the time the policy was issued or last renewed: .. Plain1iffargues that e\·en if the Court were to find that its On.ler related only to the midterm cancellation. "lational ignored Insurance Law fl-+26 and the policy provisions regarding nonrenewal and nonrenewal notice. Insurance Law 3426( 11 )(0)(2)(e){ I) provides: A covered policy shall remain in full force and effect pursuant to the same terms. conditions and rates unless written notice is mailed or delivered by the insurer to the first-named insured. at the address shown on the policy and to such insured·s authorized agent or broker. indicating the insurer"s intention: (A) not to renew such policy. Plaintiff further argues that both the Insurance Law and the terms of the insurance policy regarding nonrenewal and notice of nonrenewal required National to give Allsta notice of its intent not to renew Allsta"s policy at least 60 days prior to the end date of that policy. Insurance Law §3426(! J)(c)(J); McC!eavev v. P!wsicians Reciprocal Insurers. 648 '.\'. Y. S.2d 148 (2d Dept. 1996)('.Contrary to the plaintiffs' contentions. the dcfern;lant provided them with adeguatc notice of non-renewal (see. Insurance Law §3426(g)(2); (e)(3). The plaintiffs received notices of non-renewal more than 60 da) s prior to the expiration of the policies and the notices indicated that the policies were being canceled due to their claim histories. The defendant did not breach an implied covenant of good foith and fair dealing. :\otably. the defendant provided notice to the plaintiffs that they had suffered unacceptable losses thereby providing objective credible evidence that nonrcnewal of the policies was based on underwriting criteria.'")(citation omitted). Moreover. argues plaintiff. by its express terms. Insurance Law ~3426(c)(2) pro, ides that all notices ofnonrenewal must contain the specific reason or reasons for non-rene\\:al. Plaintiff argues that "Jational was required to pnl\ ide notice of nonrencwal and the loss experience regarding policies to Allsta prior to the October .J. 201 I cancellation. Since no notice ofnonrenewal or loss experience was provided to Allsta. plaintiff contends that the policy remains in full force and effect under lnsurancc Law §34:26( I J)(c)(3 )(d)( I). Plaintiff forthcr argues that National's August 17. 2011 notification lo the OMV to canccl Allsta"s insurance ,·iolated Insurance Law §J426(! l)(c)(3)(d)(l) and this 8 [* 10] FILED May 08 2012 Bronx County Clerk Court's July 21. 2011 Order. Furthermore. plaintiff alleges that National violated Vehicle and Traffic Law ~313( 1)(a) (hercinaJier "YTL··) because no notice was received by Allsta or its broker/agent Mr. Silverman. YTL §313(1 )(a) provides: No contract of insurance for which a certiticatc of insurance has been filed with the commissioner shall be terminated by cancellation by the insurer until at least twenty days after mailing to the named insured at the address shown on the policy a notice oftennination by regular mail. with a certificate of mailing. properly endorsed by the postal service to he obtained. Preliminarv Injunction In order to obtain a prcliminarv injunction. plaintiff must demonstrate: 1) a probability of ultimate success on the substantive merits ufthe action: 2) irreparable harm will occur if the preliminary injunction is not granted: and. 3) a balancing of the equities in favor ofplaintifrs position. Aetna Insurance Co. v. Capasso. 75 N. Y.:Zd 860 ( 1990): U.S. Reinsurance Corp. '. Humphrevs, Ci 18 N.Y.S.2d 270. 273 (I" Dept. 1994). Evidence demonstrating a likelihood of success on the merits need not he conclusive. Terrell v. Terrell. 719 "J.Y.S.2d 41 (!"Dept. 2001) citing Demartini v. Chatham Green. Inc. 565 N.Y.S.2d 712 (!"Dept. 1991). It is well settled that a likelihood of success on the merits may be sufficiently established even where the facts are in dispute and the evidence is inconclusive. Four Times Square Associates. L.L.C. v. Cigna Investments. Inc., 764 N.Y.S.2d I (l" Dept. 2003) citing 1\fa v. l.ien. 604 N.Y.S.2d 84 (1" Dept. 1993). '·As to the likelihood of success on the merits, a prima facie showing ofa right to relief is sufficient: actual proof of the case should be left to further court proceedings ... TetTell. .1upru. quoting McLau~hlin. Piven. VooeJ v. W.J. Nolan & Co., 498 N. Y .S.2d 146 (2d Dept. 1986 ). With respect to establishing irreparable harm. the plaintiff must show that the alleged harm is "imminent. not remote or speculative." Golden 1·. Steam Heat. Inc., 628 N.Y.S.2d 375, 377 (2d Dept. 1995). With respect to the balancing of the equities. the First Department has held that "[w]hile the existence of some wrongdoing may impel a result for one side. the "balancing of the equities" usually simply requires the court to look to the rclati'e prejudice to each pa1w accruing from a grant or a denial of the requested relief. .. !via. 604 at 84. ··Preliminary injunctive relief is a drastic remedy \Illich \\ill not be granted 'unless a clear right thereto is established under the law and the undisputed facts upon the moving papers. and the burden of showing an undisputed right rests upon the ll10\Unt'". Id ciring Nalitt v. Citv of New York, 526 N.Y.S.2d 162 (2d Dept. 9 [* 11] FILED May 08 2012 Bronx County Clerk 1988) 'fllOling First J\ational Bank, .. Hi~hland Hardwoods. 471 NY.S.2d :160 (3d Dept. 1983). Cou1ts have denied motions for preliminary injunctions where the offending conduct has ceased and there is no proof that it was likely to occur again. See. Greenfield\. Schultz. 660 NY S.2d 624. 628 (Sup. Ct. N.Y. Cty. 1997). a/j'd in por!. 673 N.Y.S.2d 684 (1" Dept. 1998); Grcilsheimer v. lkrbcr Chan & Essner. 1998 WL 547092 (S.D.N.Y l 998)(""A suit for injunctiw relief is moot when the offending conduct ceases and the court finds 'that there is no reasonable expectation that it will resume.···) (cita1ions omined): People bv Lefkowitz v. Alexanders Dept. Store. Inc .. 344 J\.Y.S.2d 719 (!"Dept. 1973): :\ann v. Raimist. 255 N.Y. :107 (1931)(;\ preliminary injunction is not to be used to punish past wrongdoing. but as protection for the future). Plaintif'f's application for a prdiminary injunction is denied for several reasons. At this juncture, a preliminary injunction is moot. The subject policy terminated by its nntural terms on October 4. 2011. The policy was a one year policy. effective from October 4. 2010 and ending on October 4, 2011. Putting aside the issue of whether the policy was cffccti\'dy terminated on .lulv 24. 200 I. the insurance policy was set to expire on October 4. 2011. Thus. the alleged ··"rongdoing" here is a past act because the policy is no longer in effect. Consequently. the ··offending conduct"" hns ceased and since 'ialional has elected not to renew the policy, there is no reasonable expectation that 1he conduct "ill resume. In any event. plaintiff fails to meet the criteria for a preliminary injunction: plaintiff fails to show a probability of ulti1i1ate success on the substantive merits of the action and a balancing of the equities in plaintiffs favor. Termination of the PoliC\· Defendants claims of alleged insurance fraud and/or criminal activity by Allsta's principal. the Continental action and the investigation into alleged criminal activity by the U.S. Attorney's Office are irrelevant as neither Sanders nor any other entities have been criminally charged. Nevertheless, l\ational effectively terminated the policv mid-term on July 24. 2011. there is no question that, as a matter of law. there was a material change in the nature and extent of the risk occurring a tier issuance of the policy beyond what was originally contempbted. The ""material change"" is that the policy went from covering 27 vehicles to covering 75 automobiles. a change in the size oflhc risk by 300%. This change presented a risk to J\ational far beyond what was original Iv contemplated. In addi1ion, after \:ational issued the insurance policy to plaintiff. numerous accidents began to surfocc. none of\\hich were reported to National by plaintiff Alisia as was IO [* 12] FILED May 08 2012 Bronx County Clerk required. Consequentlv. since the policy was effectively terminated on July 24. 2011. there was no requirement that National provide Allsta notice of its intent not to renew the policy at least 60 days prior to the October 4. 20 I I end date of that policv. Plaintiffs Second Order to Show· Cause The objective plaintiffs first Order to Show Cause and the Order issued was lo preserve the status quo with respect to Allsta's coverage under the policv and to enjoin National from taking any steps in furtherance of its planned July 24. 2011 mid-term cancellation ofthe policy u1itil the Court had an opportunity to hear oral arguments and issue a decision. The question there was whether National was entitled to cancel the policy effective July 24. 2011 or whether the policy must have remained in effect for the entire policy period and expire on October 4. 2011. The second Order to Show Cause which seeks to "reinstate each and every insurance policy'' of plaintiff which was the subject of the July 21. 2011 Order must be denied. The relief now sought by Allsta would not result in a "reinstatement" of the policy. as suggested by Allsta, but the issuance of an entirely new contract of insurance. The October 4. 2001 "cancellation .. was tantamount to \lations's election not to renew Allsta·s cuverage following the scheduled and agreed-upon expiratiun llf the policy at the end of its term. ;\s such. National's nonrenewal of the policy \\as not the type of conduct conternplated or prohibited by the July 24. 2011 Order. Thus. 'Jational did not violate the July 24. 2011 TRO. Accordingly. plaintiffs application for civil and criminal contempt against defendants must be denied. Defendants' Motion lo Dismiss Defendants mo,·e to dismiss plaintiffs complaint pursuant to C.P.L.R. ~321 l(a) on the grounds of defense found upon documentarv e\·idencc: and,or C.P.l..R. ~321 l(a)(7) on the grounds of failure to state a cause of action: and/or C.P.1..R. ~3211 (:allowing this Court to treat this motion as a motion for summary judgment pursuant to C.P.L.R. ~3212 on the grounds that there are no triable issues of fact. \\'hen a defendant moves to dismiss the complaint pursuant to C.P.L.R. §3211 (a)(7), based on legal insufficiency. plaintiff has no obligation to show e'idcntiary facts to support the allegations of the complaint. Generally. on a motion to dismiss made pursuant tu C.P.L.R. ~1211. the court must "accept the facts 11 [* 13] FILED May 08 2012 Bronx County Clerk as alleged in the complaint as true. accord plaintiffs the bcnelit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory". Leon v. Martinez, 84 N.Y.2d 83 (1994). On a motion to dismiss pursuant to C.P.L.R. §3211 (a){7). the complaint survives when it gives notice of what is intended to be proved and the material clements of each cause of action. Rovello v. Orofino Realtv Co .. Inc. 40 N.Y.::'.d 633 ( J 976): Lndcrpinning & Foundation Construction v. Chase Manhattan Bank. 46 \J. Y.2d 459 ( 1979). Furthermore. on a motion to dismiss for legal insurilcicncy, it is proper to consider thee focts in plaintiffs affidavit for the limited purpose of sustallling the pleading. Ackerman v. Ackerman, 462 \J.Y.S.2d 657 (!" Dept.1983). A plaintitlsuff1cirntly states a cause of action where (l) the pleading states any cause of action (and not whether there is evidcntiary support of the complaint). Rovdlo, supra. However. "fi]n those circumstances where the legal conclusions and factual allegations are flatly contradicted by documentary evidence. they are not presumed to be true or accorded every favorable inference. Biondi v. Beekman Hill House J\pt. Corp., 692 \I. Y.S.2d 30.+ ( l ''Dept. J 999), a/fd 94 N. Y.2d 659 (2000): Kliebert v. McKoan. 643 I\ .Y.S.2d 114 ( l" Dept. 1996). Ii·. denied 89 N Y.2d 802, the criterion becomes 'whether the proponent of the pleading has a cause of action, not whether he has stated one'". Guggenheimer v. Ginzburg, 43 N.Y.2d 268 ( 1977); see also Leon. supro: Ark Rrvant Park Corp. v. Bryant Park Restoration Corp .. 730 N. Y.S.2d 48 (I" Dept. 200 l }. On a motion to dismiss pursuant to C.P.L.R. ~3211 (a)( I). "a dismissal is warranted only if the documentary evidence submitted conclusive!' establishes a defense to the asscrkd claims as a matter of law". Leon. 84 N. Y.2d at 88. A motion to dismiss based on documentary e\·idcncc requires that the document relied upon must definitely dispose of plaintiffs claim. Philips South Beach. l.LC v. ZC Specialtv Ins. Co., 867 N Y.S.2d 386 (I" Dept. 2008). Plaintiff filed its complaint for a TRO. a permanent injunction and for specific perli.irmancc. The gravamen of plaintiffs complaint is that :'>:ational had no basis to cancel the policy it issued. However. defendants have shown that it did not default on its contractual obligations to plaintiff. Herc. the insurance policy could be terminated pursuant to the "material change" that the policy went from covering 27 vehicles to covering 75 automobiles. This change presented a risk to National frir beyond what was originally contemplated. In addition. after ."ational issued the insurance policy to plaintiff. National learned of numerous accidents of the vehicles it insured. none of which were reported to l\atiomil by plaintiff Allsta as was required. I :2 [* 14] L___ FILED May 08 2012 Bronx County Clerk Accordinglv. National cannot be compdled lo specific performance or to continue insuring Allsta. Thus. the plaintiffs complaint is dismissed pursuant to CP.L.R. ~3211(a)(7). This constitutes the decision and order of this Court. Dated: .'\p1il 9. 2011 {'-b.,~ 2 cJ il z, Hon. Alison Y. Tuitt I .3

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