Philadelphia Indem. Ins. Co. v Harleysville Preferred Ins. Co.

Annotate this Case

Download PDF

Philadelphia Indem. Ins. Co. v Harleysville Preferred Ins. Co. 2017 NY Slip Op 33236(U) December 11, 2017 Supreme Court, Orange County Docket Number: EF001471-2016 Judge: Sandra B. Sciortino Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] ORANGE COUNTY CLERK 12/13/2017 09:56 AM INDEX NO. EF001471-2016 NYSCEF DOC. NO. 102 RECEIVED NYSCEF: 12/13/2017 To commence the statutory time for appeals asofrigh_t (C:PLR5513 [a]), you are advised toserve a_ copy of this order, \Vithnotice of entry, upon all parties~_ S'()PREME COURT OF THE STATE OFNEW YORK· COUNTYOF ORANGE -----.,._ --.,.-----...;-__ . .;____-..; _______'."'_----_-.,.-------""'"----"'-"'---------------------~x-PHILAD ELPHIA INDEMNITY INSURANCE COMPAN.Y, Plaintiffs, DECISION.AND ORDER INDEXNO.: EF001471-2016 Motion Date: 10/19/2017 Sequenc~' No~ 3 - 5 -against- HARLEYSVILLEPREFERRED INSURANCE COMPANY, Defendants. ;., , ___. ; ._ --.,.--.,....;---.,..,.-_ ..__ ___ -.,._ .,.-"'-:-.,.·---'".,.--.,.""--.. ;.,._ .;. __ ;.;._____ ____________________x SCIORTINO, J. The following papersnumbered. 1 to 43 were read on the motion (Seq. #3) by Harleysville Preferred Insurance Company (Harleysville) tocompel Philadelphia Indemni tylnsurance Compapy · _(Philadelphia) to respond to all outstanding discovery demands; the motion (Seq. #4) by Philadelp}iia for. summary judgment dismissihg the counter9laims of Harleysville, and upon dismissal .of the counterclaims, for leave to cliscontinue the action; .andthe cross-motion (Seq. #5) byHarleysvilie for leave to serve and file a Second AineI1ded Ailswer, asserting an additional counterclaim against Phlfadel phi a: NUMBERED .PAPERS Notice of Motion (Seq. #3) I Affirmation inSupport (Altman) I Affirmation of Good Faith (Altman) I Exhibits A -H Affirmation in Opposition (Cassidy}/ Exhibits l -4 /Memorandum of Law Reply Affirmation (Altman) I ExhibifA Notice ofMotion·(Seq. #4) /Affirmation (Cassjdy) /Exhil:)its 1- 5 t Affidavit(Steii1Qock) /F;xhibits 1 - 4 I M~IJlo~andum of Law Notice of Cross"'.Motion #5) I Affirma_tion (P~iper)/ Exhibits A -E ReplyAffirmation (Cassidy)/ Exhibits l ~J/ Memorandum of Law rneq•. Filed in Orange County 12/13/2017 12:00:00 AM $0.00 1 9 Bk:of 5119 Pg: 171 1 ;. 11 12 .,.17 18 .._19 20-31 32,_..:38 39.,.43 Index: # EF001471-2016 Clerk: EB [*FILED: 2] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 Upon the foregoing papers; •Philadelphta's·motion.(Seq. #4) is granted, and Harleysville's motions (Seq. #s 3 and5) both are denied, asJoilows: Background This is an actfon between two insurance companies for declaratoryjudgment teg_arding coverage in a related personal injury action entitled Blake v. Nashopa House Crysta/Run Village; . Index Number 0294/2015 (the Blake Action). This matter was commenced by the electronic filing . of a Summons and Complaint by Philadelphia on March 3;2016. The Complaint asserts that the Blake Action consists of claims that Ernest Blake was injured on three separ~te oc~asions from falls which took place in2012 and 2013, while he was a resident of a group hom_e operated by Crystal Run. :His injuries were aU{!ged to be the result of m~ltiple vfolations of Crystal Run's duty of due C(ll"e and negligence in the operation of the group home. 'Blake's secorid and third causes of action asserted violatfons of New York State PublicHeaithLaw arid FedetaLLa.w, respectively. Philadelphia insured Crystal Run with a Commercial Linesjfolicy effective Januaryl, 2002, and ending Jahuafy 1_, 2013. Thereafter,Harleysville issued a CommercialLine~ Policy, effective January 1,201Jthrough January l,2C>l4. Philadelphia's Complaintasserts that the injuries which .resulted from the third fall, on March7,-2013, shou!d be covered by Harleysville's policy, but that 'Harleysville ha.s refused coverage;. Harleysville's Answer, asserting denials arid eight separate •affirmafive defenses; was filed April 20, 2016. . By Notice o! Motfon filed on iantiafy 26, 2017, Harl~ysville sought leave to. amend its Answer, to assert four counterclaims against Philadelphia, which Harleysville claimed would esfabllsh that iris\lrance coverage inthe Blake Action was the sole responsibility of Philadelphia; Prior to the returri date of that motion,the Court was advised that the plaihtiff sclaims in the Blake 2 2 of 9 [*FILED: 3] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 Action had been settled, with Philadelphia arid HarleysviHe .each contfibuting a portio11 of the · settlement funds. By Decision and Order date-d .May 2, 2017, Harleysviile was granted leave to amend its Ailswef fo assert two of the four proposed ' counterclaims, and 'wa.s directed to electronically fite its Amended Answer and counterdaims on:or before:May 12,2017. Ha.rleysville electronically filed its Amended Answer on ·May 4, 2017. The First Counterclaim asserts thattheclaims in the BlakeAction predate and thus fall outside the coverage of the Harleysville policy. The Second Counterclaiin asserts thatthe Harleysvill~ policy does not provide coverage for intentional acts or for yiolatiqn_s of§tatut es or regtilati911s. Both Counterclaims thus seek a declaration that Harleysville }ias no obligatio11 to defend, 'indemnify,_or pay any fees, ·damages, or expenses to Philadelphia or any other party relating to the claims asserted in the Blake Action, and thatPhilad~lphi_ais solely responsible to indemnify CfystaLRun fn that action .. Philadelphia's Reply to Counterclaims, asserting denials and nine A.ffirrriative Defenses; was filed on May 24~.2017 . Current. Motions ByNoti<::e of Motion (Seq. #3) filed onMayJO, 2017; Harleysville seeks an order compelling Philadelphia to fully respond to all outstanding 9is<;:overy demands. In the interest of judicial economy, and for the rea§ons set forth below, the arguirierits of the respective parties on this motion are not discussed herein. By Notice of Motion (Seq. #4) filed cm July2l,2017, Philadelphia seeks summary judgment . and dismissal ofHarleysvllle's counterclaims, arid, upon such dismissal, leave to discontinue its O\Vn actiori. Philadelphia submits that its action was brought to obtain a declaration regarding the respective rights and obligations o.t Philadelphia and 3 of 9 Harleysville in connection with the Bla,ke [*FILED: 4] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 Action. As the Blake Action has been settled with both iilstirance companies contributing to the settlement, arid without any reservation of rights by Harleysville, Philadelphia contends that neither its.own suit horthe counterclaims present ajusticia.ble controversy. Philadelphia further argues that . any declaratory judgment issued by the .Court'in this :action would amount to an . impenriissible ·advisory opinion. Philadelphia takes. the further position thatany future claims Harleysville may assert are barred by the voluntary payment doctrine . .Philadelphia contends ' that Harleysville, after 4aving expressly disclaimed coverage in the Blake Action, a position it maintains to ~his day; voluntarily contributed to defense costs and to the. settlement in that action, without any reservatlori .. Philadelphia thus asserts that Harleysville wa.iyed any right torecovedhe sums it paid ori behalfof Crystal Run. Philaqelphia thus concludes that the counterclaims shouid be dismissed, arid, upon sµch ~ismis~~l, that Philadelphia should.be.permitted tO discontinue this action .. By Notice of Cross-Motion .filed on September l, 2017, Harleysville again seeks .leave to amend its Answer, to assert an additional counterclaim~ The proposed Second Amended Answer now.includes a counterclaim seeking reimbursement from Philadelphia of the $300,000 Harleysville contributedto the settlement in the Blake Action; Harleysville asserts that the injuries in that actfori stemmed from a continuous course of conduct that began . during the period covered by the Philadelphia policy, and that Philadelphia should have paid the entire.settlement amount With respect to Philadelphhi's motion, Harleysviile asserts thatthe motion must be.denied on the basis of the Court's finding In the May 2 Decision that the settlement documents in the Blake Action did not contain ari express waiver or release .of Harleysville's claims in this . matter. Harleysv1He's attorne)'further asserts that he personally advised Philadelphia's attorney that any 4 4 of 9 [*FILED: 5] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 settleinel1tfa the Biake Acti6riwould be subject to .HarieysvHie's reservation of its right to recoup an.Yinonies paid.toward the settlement. Furthermore, llarleysvllle :asserts that Philadelphia lllay not raise the issue of voluntary payment on a motion to dismiss as such a motion is based on the pleadings alone, and may not be .supported by extrinsic evidence. Finally, Harleysville contends thatthe voluntary payment doctrine. is inapplicable in any event asHarleysville made payments notas a volunteer, but io protect its own interests, and.specifically to preventits insured, Crystal Run, from exposure to potentially greater . ' ' . - liability; Harleysville does · not oppose that porji9n of Philacielphia's 111otion which seeks to discontinue Philadelphia~s ·claims.. However, on the ba,sis of the argmnents set forth above, jt co11cludes that the motion to dismiss Harleysville';s 99\lnterclaims must be denied, and leave should be granted toHarleysville to againamend its Answer to assert an additional col1riterciailll.against Philadelphia for reimbursement ofthe monies it contributed to the Blake settlement. In reply, and in opposition to the cross-motion, Philadelphia reiterates its position that :.Harleysvilleparticipated iilthe··settlementoftheBlakeActionwithout reservation, and.specifically denies that Harleysville's counsel ever notified Philadelphia's counsel ofits n~servation ofany right to pursue a claim for reirI1bursement. In any event, it is undisputed that there is no writillg bywhlch Harleysville condi~ioned its contribution to the settlement upon lts abilitYto maintain Claims against Philadelphia. Philadelphia reiterates its position that the settlement of the Biake Action .tenders the ·respective claims of the parties in this aetiori rrioot. Philadelphiafurther submits thatHarleysville's new proposed counterclaim is patently without mefit, in that it is barred by the'voluntary payment 5 5 of 9 [*FILED: 6] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 doctrine; .Philadelphia thus concludes that its motion should be granted in its ehtlfety,. Harleysville~ s 111otion.for leave to again amend its Answer should be denied, and all claimsal1d. couhterclainis should .be dismissed. Discussion .Summmy Judgment Standard "A party moving for summaryjudgment 111\lSt make aprimaJacie showing of entitlement fo . . . ' - judgment as a matter of law, offering sufficient evidenceto demonstrate tl1e absence of any material issues of fact" (Nasi1 v. Porl'fYash. Union Free School Dist., 83 AD3d:l36, 14(} [2d Dept 2011]), citing Alvarez v. ProspectHosp., ·68 NY2d 320, 324 [1986]). The funetiOn of the-court on such a motion is issue finding, andnotissue determination (Silbiian v. Tweiitietl1 ·centi1ry-Fox Fibiz Co1p., 3 NY2d395 [1957]), and the court is obliged to draw all reasonable inferences in favor of the honmoving party (Rizzo v. Lincoln Diner Corp., 215 AD2d 546 [2d DeptJ995]). Where thereis any doubt aboufthe existence of a material and ·triable issue of fact, summaryjudgment niustncit be granted (Anyanwu v. /olmson,276 AD2d 572.[2d Dept 2000]). · Voluntary Payment Doctrine . The voluntary payment doctrine "bars fecovefy of payments voluritarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law".(Dil/on v. U-A Colwnbia. Cablevision of Westchester, Inc., 100 NY2d 525, 526 [2003]). The doctrine .of Sl}brogation, upon which 'a claim for common7law indemnification is based, such as that which Harleysville now seels,s to advance, "roaynot be inyoked where.the payments sought to be recovered are voluntary" (Afarkel1ns. Co. v. American Guarantee andLiability Ins. Co;, 111 AD3d 678 [2d Dept 2013], qudtingBroadwaxHoyston lyfack Pev., LLC v. Kohl, 71 AD3d ·93 7 [2d Dept 201 O]). 6 of 9 [*FILED: 7] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 "A party .seeking subrogation call. establish that itspayn1eI1ts were not voiuntafy eithefby ' ' pointing to a contractuai obligation or the need to protect its own. legal or-economic interests" (Broadlvay, 71 AD3d at 937). In the absence of-a eohtractual obligation, ''the party seeking_ subrogation must ·show that the actis: not:merely helpful but necessary-to the protection of its interests" (id)(emphasis added). 1t is this ,ground· upon which Harleysville rests its proposed 1 counterclaim for indemnification from Philadelphia, by asserting that it contributed to the settlement ofthe Blake Action in order to preventCrystal Rµn froll1 facing potentially gre<iter liability; Harleysville's disclaimer of coverage in th,e Blake Action is fatal to its proposed counterclaim. Harleysville expresslydisclaime~ cov{!rage, and continues, to this day, to assertthat it Qever had any obljgation to defend or indemnify Crystal Run in that action. Vigilantlns. Co. v. Travelers Prop. Cas.. Co ..ofAm., 243 F.Supp.3d -405 [SDNY201'7], dted by Harleysville, recites the applicable rule here: "Aniristirer which.pays a loss for which itis hot liable-thereby becomes a iriefe :voiuhteei', ancl Is hot entitled to subrogation, in the absence ofan agreement therefor" (243. F;Supp.3d at 422, quotingNat'!UnionFire Ins. Co. v. Ranger1ns. Co.; 190 Al)2d 3Q5 [4thDept 1993]). By Harleysville~s own assertion, itmade payments toward the defense and settlement of the Bl<:tke.Action which ithad no obligation to make. Harleysville' s reliance ori cases in which insurers made payments in order to limit theirown liability in the underlying actionis misplaced. In each of the cases cited by Harleysville, the insurer which sought to recover payments it had made was required to indemnify its insured in the underlying action, and soughtrepaylTient fromanothednsurer which was alS()required to indemnify the insured but refused to do so. Such is notthe case here. Rather,Harleysville maintains thafif was iiotrequired to indemnify Crystal Run in the Blake Action, and has presenteci no evidence:that '7 7 of 9 [*FILED: 8] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 Phih1delphia ever refused to indemnify the insured. Furthermore,Harleysville' s attempt to avoid the voluntary paynieht doctrine by assertihgthat it cohtributecl to the .settlement of the Biake Action iri order to protectits insured,Crystal Run, from . potentially greater liability,_necessarily fails. On this issue, Harleysville must establish that its contribution to the settlement was" not merely helpful but necessary to the protection ofitsfoterests" · (Broadway, 71 AD3d at 937). Harleysville asserts thatitmade payments to protect the interests of Crystal Run, and makes no .argument that its own interests were. protected in any way by the settlement of the Blake Action. Any such argument would beillogical, as Harleysville continues to assert ihatit was under no e>bligaticm to indemnify Crystal Run, and any damages suffered ~yCrystal R.u11 thus would hav(! no impact on Harleysville. Harley~ville's continued insistence that it had no obligation to indemnify Crystal Run ls dispositive ofbothHarleysville's rri6tionicfr leave' to amend its Answer and Pi1lladelphia's motion for siunmacyjudgrilerit dismissing the counterclaims. Harleysvilleexpressly denies any contractuat obligation to contribute to the Blake settlement, and asserts thatitmade payments to protect Crystal Rtin'sinterests, .not its own (cf. Broadway, 71 AD3d at 937). Harleysville thus cannot invoke the doctrine of subrogation, upon which its proposed .counterc.laim for ~ommon.:law indemnification against Philadelphia is based. Harleysville's .proposed counterclaim is therefore barred by the voiuhtary payment doctrine, and is patently devoid cifirierit. Under the circumstances, the ITiotion.forJeave to .amend should be denied (see Strunk v. Paters01i, 145 Ad3d 700. [2d bept2016]). As the voluntary paymentdoctriile bars Harleysville'sattempt to recover from Philadelphia, the remaining counterclalrns, and the complaint in this action, allofwhich seek a declaration of the 8 of 9 ..1,....-------------------------------. [*FILED: 9] ORANGE COUNTY CLERK 12/13/2017 09:56 AM NYSCEF DOC. NO. 102 INDEX NO. EF001471-2016 RECEIVED NYSCEF: 12/13/2017 . - - . . rights and obligations C>f the respective parties,. no .longer present a justiciable controversy. Philadelphia has never disputed.Its Obligation to indemnify its insured, arid it eoritribl1ted to the settlement of the Blake Action in.' satisfaction of that obligatfon. Harleysville coritribl1ted to that settle~ent as a volunteer, and thus caririot recover the sllnis it paid. The riiatteris moot, and any further deelaration by the Court as. to the rights of the parties herein wollld have no reai, practical effect (cf Goodman v. Reisch, 220 AD2d 383 [2dDept 1995]). On the basis of the foregoing, it is hereby ORDERED that Harleysville~s cross-motion (Seq. #5) for leave to again amend its Answer is denied; and his further · ORDERED thatPhiladelphia's motion (Seq'. #4) is in all respects granted,the counterclaims asserted in Harleysyille'.s Anemded Answerfiled on May 4, 2017 are dismissed, and this action is hereby discontinued; and itis further ORDERED that Harleysville's .motion (Seq. #3) .to compel Philadelphia to. respond to outstanding discovery demands is denied as moot. The foregoing constitutes the Decision a.rid Order of the Court. Dated: December 11, 2017 Goshen~ New York TO: Miranda Sambl.lrskySloneSklarin Verveniotls LLP Attofl1ey.S for Philadelphialndenmity Insurance Company Hurwitz & Fine, P.C. Attorneys for Harleysville Preferred Insurance Company VIA NYSCEF 9 9 of 9

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.