Arias v Allstate Ins. Co.

[*1] Arias v Allstate Ins. Co. 2004 NY Slip Op 51448(U) Decided on October 7, 2004 Civil Court Of The City Of New York, New York County 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 7, 2004
Civil Court of the City of New York, New York County

RAFAEL D. ARIAS, Plaintiff,

against

ALLSTATE INSURANCE COMPANY, Defendant.



8222/2003

Jeffrey K. Oing, J.

Plaintiff, Rafael D. Arias, moves, pursuant to CPLR 3212, for an order granting him summary judgment. Defendant, Allstate Insurance Company ("Allstate"), also moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint.

Background

Plaintiff sustained personal injuries when the vehicle he was operating was allegedly rear-ended by an automobile owned by Joseph Sheehan on October 24, 1998. The vehicle was stolen and operated by an unknown perpetrator. At the time, Mr. Sheehan had in force a valid automobile insurance policy issued by Allstate for this vehicle. On April 1, 1999, Allstate received a letter from plaintiff's counsel requesting that it contact counsel concerning plaintiff's personal injuries resulting from the October 24, 1998 accident (Cross-Motion, Johnson Affirm., 7/7/04, ¶ 6).

By letter dated June 16, 2000, Allstate notified both Mr. Sheehan and plaintiff's counsel that it "disclaimed coverage and denied any and all liability or obligation" for the accident (Id., ¶ 7). That letter reads as follows: [*2]

With respect to the accident in which you were involved or for which you may be legally liable, occurring on October 24, 1998 at AMSTERDAM AVE AND 84TH, MANHATTAN, NY, the Allstate Insurance Company hereby disclaims and denies any and all liability or obligation to you or others under its policy numbered 078597595 and issued to JOSEPH SHEEHAN.

This disclaimer is made because your vehicle was operated without your express or implied permission. The vehicle was reported stolen.

Under the definition of the policy the operator of the vehicle was not an insured operator and was operating the insured vehicle without express or implied permission.

The Allstate Insurance Company will take no further action with respect to any claim which you may have against it or with respect to any claim or suit against you which has arisen or which may arise out of said accident and hereby withdraws from the matter entirely.

(Cross-Motion, Ex. H). Thus, the basis for Allstate's disclaimer and denial of coverage was due to the fact that at the time of the accident Mr. Sheehan's vehicle was stolen (Cross-motion Papers, Ex. A).

Notwithstanding Allstate's disclaimer and denial of coverage, over a year later, on September 26, 2001, plaintiff commenced an action against Mr. Sheehan in the Civil Court, New York County (Moving Papers, Ex. B). The endorsed complaint sets forth the following allegation:

ACTION by the plaintiff to recover from the defendant the sum of $25,000.00 for serious personal injuries as defined in Insurance Law 5102(d), sustained by him on October 24, 1998, at or near the intersection of Amsterdam Avenue and West 84th Street, New York, New York, when a motor vehicle owned by the defendant and operated by him or by a person with his knowledge, permission and consent collided into a motor vehicle owned by the plaintiff and operated by him thereat, the accident having been caused solely by the negligence of the plaintiff or his permissive-use operator, without any negligence on the part of the plaintiff contributing thereto.

(Id.). Apparently, Mr. Sheehan did not forward this complaint to Allstate. Nor did plaintiff's counsel serve a copy of the complaint on Allstate.

Mr. Sheehan did not interpose an answer and on August 12, 2002 an inquest was held in which a default judgment was entered against him and in favor of plaintiff for $25,000 (Moving Papers, Ex. C; Cross-Motion, Ex. J).

On January 13, 2003, plaintiff commenced the instant action against Allstate seeking to satisfy the $25,000 default judgment. In the instant complaint, plaintiff alleges the following:

ACTION by the plaintiff to recover from the defendant the sum of $25,000.00, pursuant to Insurance law 3402(a)(2), representing the amount of a judgment dated December 4, 2002, obtained by him for personal injuries sustained by him on October 24, 1998, in an auto accident against Joseph Sheehan, who was insured under defendant's insurance policy at the time of the accident, a copy of said judgment with notice of its entry having been served on the defendant as well as its insured, and more than 30 days having elapsed therefrom and the judgment having [*3]remained wholly unsatisfied. Plaintiff is entitled to interest from the date of the underlying judgment, December 4, 2002, so that the value of the underlying judgment is entirely satisfied by this defendant pursuant to the statute under which this action is brought.

(Moving Papers, Ex. A).

Discussion

Preliminarily, this Court addresses Mr. Sheehan's automobile insurance policy. There is no dispute that Allstate issued such a policy of insurance to Mr. Sheehan and that it was in effect at the time of the accident. The critical issue to be resolved in this controversy is the validity of Allstate's June 16, 2000 disclaimer and denial of coverage. Resolution of that issue requires a review of the terms of the policy of insurance issued to Mr. Sheehan.

Here, plaintiff's counsel has submitted what he claims is a standard Allstate policy (Mendez Affirm., July 14, 2004, Ex. A). Although Allstate's counsel challenged the validity of plaintiff's counsel's earlier submission (Moving Papers, Ex. H) as a "random page from an unknown insurance policy" (Johnson Affirm., July 7, 2004, ¶ 20, fn 2; Tenney Affirm., July 13, 2004, ¶ 21, fn 2), Allstate's counsel makes no such challenge concerning plaintiff's subsequent submission. This Court further observes that Allstate although having numerous opportunities has failed to submit a copy of Mr. Sheehan's automobile insurance policy. Accordingly, given the absence of a dispute concerning the subsequent submission, this Court is compelled to accept plaintiff's counsel's submission as being the relevant automobile policy of insurance at issue in this matter.

The principle is well settled that the duty to defend is separate and distinct from the duty to indemnify, with the former duty being broader than the latter one (Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 423-424 [1985]). While an insurer's duty to defend must be determined from the allegations of the complaint and the terms of the policy, the duty to pay is determined by the actual basis for the insured's liability to a third person (Id. at 424; Hotel Des Artistes, Inc. v Gen. Accident Ins. Co. of America, 9 AD3d 181, 187 [1st Dept 2004]). In other words, the duty to pay requires that the loss falls within the policy coverage (Id. at 424-425). Further, and more importantly, an insurer may escape its duty to defend under the policy only if it could be concluded as a matter of law that there is no possible factual or legal basis on which the insurer might eventually be held to be obligated to indemnify the insured under any provision of the insurance policy (Hotel Des Artistes, Inc. v Gen. Accident Ins. Co. of America, supra, 9 AD3d at 187).

Here, while the complaint's allegations and policy's terms may demonstrate Allstate's duty to defend, the clear terms of the policy demonstrate that there can be no possible factual or legal basis upon which Allstate would have been held to be obligated to indemnify Mr. Sheehan. On the issue of Allstate's obligation to indemnify, the terms of the policy provide that "Allstate will pay for all damages an insured person is legally obligated to pay" and that "[u]nder these coverages, your policy protects an insured person from claims for accidents arising out of the ownership ... or use ... of an insured auto" (Mendez Affirm., July 14, 2004, Ex. A, p. 6). The policy of insurance defines an "insured person" as "you", "any resident" and "any other person using [your insured auto] with your permission" (Id.). The undisputed facts establish that Mr. Sheehan's vehicle was stolen and was operated by an unknown perpetrator. Under these [*4]circumstances, Allstate's June 16, 2000 disclaimer/denial of coverage was valid. As such, it neither had a duty to defend nor a duty to pay with respect to plaintiff's underlying personal injury action against Mr. Sheehan, Allstate's policyholder.

Accordingly, plaintiff's motion for summary judgment is denied. Defendant's motion for summary judgment dismissing the complaint is granted, and the complaint is hereby dismissed. Upon service of a copy of this order with notice of entry on the appropriate Clerk, the Clerk is respectfully directed to enter judgment dismissing the complaint.

This memorandum opinion constitutes the decision and order of the Court.

Dated: October 7, 2004

____________________________

HON. JEFFREY K. OING, C.C.J.