General Sec. Prop. & Cas. Co. v American Fleet Mgt., Inc.
Annotate this CaseDecided on December 9, 2005
Supreme Court, New York County
General Security Property & Casualty Company and General Security Insurance Company, Plaintiffs,
against
American Fleet Management, Inc., VISTA INSURANCE SERVICES, INC., ROSS & COMPANY, SUMMIT INSURANCE ADVISORS, FLEET INSURANCE SERVICES, LLC, DONALD E. SOMERS, E. ARNOLD POWELL, A.W. TRANSPORTATION, ABLE RENT A CAR, ABLE RENT A CAR, INC., ADEE TRUCK & CAR RENTAL, AFFORDABLE AUTO RENTAL, AMERICAN RENT A CAR, BRONX, RENT A WRECK, INC., COLONIAL AUTO RENTAL, DE COLLO SERVICE CENTER, DOVER ROWMATIC, INC., FREEPORT RENTAL GROUP, GHASSON RENT A CAR CORP., H. QUAD LEASING CORP., HUNTINGTON AUTO RENTAL, JUNCTION SERVICE, INC., KATELYN ENTERPRISES/ELITE AUTO, LANSING, INC., RJ CAR LEASING, INC., ROWMAT, INC., ROWTAM, INC., SAFE DRIVING SCHOOL, and SWIFTY RENT A CAR, Defendants.
604480/02
Edward H. Lehner, J.
Before the court are motions for summary judgment by: i) by American Fleet Management, Inc. ("American Fleet"), Donald Somers ("Somers"), Able Rent A Car, Inc., Affordable Rent A Car, Colonial Auto Rental, Leasing, Inc., R.J. Car Leasing, Inc., Rowtam, Inc. and Wolfson's Auto Rental, Inc. (collectively, the "Franchisees") to dismiss plaintiffs' second, third, fifth, seventh, eighth and ninth causes of action against them; ii) Vista Insurance Service, Inc. ("Vista"), Ross & Company ("Ross"), Summit Insurance Advisers ("Summit"), Fleet Insurance Services, LLC ("Fleet") and E. Arnold Powell ("Powell") to dismiss plaintiffs' fifth, sixth, seventh, eighth and ninth causes of action against them; iii) Bronx Rent A Wreck, Inc. ("Bronx") to dismiss plaintiffs' second and third causes of action against it; iv) plaintiffs on [*2]liability against Bronx on its second and third causes of action; and v) plaintiffs on the second and third causes of action against the Franchisees. No relief is asserted as against any party not appearing on these motions (Tr. p. 4).
Plaintiffs are insurers (the "Insurer") that issued yearly policies commencing February 1, 1997 (the "Policies") until cancellation on April 3, 2001. The Policies are substantively identical (Tr. pp. 28-29).
Plaintiffs' complaint alleges twelve causes of action: i) breach of contract by American Fleet; ii) breach of contract by Franchisees; iii) quantum meruit against Franchisees, iv) negligence against Vista, Ross and Summit; v) negligent misrepresentation against American Fleet, Vista, Ross and Summit; vi) negligent misrepresentation against Powell; vii) negligent misrepresentation against Somers; vii) (the complaint asserts two "seventh" causes of action) fraud against American Fleet, Vista, Ross and Summit; viii) fraud against Powell; ix) fraud against Somers; ix)(the complaint asserts two "ninth" causes of action) successor liability against Fleet Insurance for acts of Summit, Ross and Vista; and x) successor liability against Fleet Insurance for acts of American Fleet. The tenth cause of action was dismissed by the Court's order dated May 20, 2005
The Policies contained the following provisions:
"ITEM ONE - NAMED INSURED ...
AMERICAN FLEET MANAGEMENT INC.
* * *
ITEM TWOLIMIT OF INSURANCE for LIABILITY COVERAGE: The most we will pay for any accident or loss is the amount shown in the schedule below minus a deductible of $25,000 each accident.
* * *
DEDUCTIBLE ENDORSEMENT1. You will reimburse us for all payment we make on your behalf up to the amount of the deductible shown in the declarations of this policy ....4. You agree to provide us with collateral in a form acceptable to us to secure your obligations under the deductible endorsement. The amount of such collateral shall be as required by us. The collateral amount shall be amended by us annually. We may also amend the amount of collateral at any time if your obligations under this deductible endorsement increase to an amount exceeding the amount of collateral in our possession. If the amended amount of collateral is less than the collateral provided, we will return the amount that is in excess of the amended amount of collateral. If the amended amount of collateral is greater than the collateral provided, [*3]you will provide us with additional collateral in the amount that amended amount of collateral exceeds the collateral held by us. Any adjustments to the amount of collateral will be provided within 30 days of receipt of a written request from the other party.
* * *
ENDORSEMENT NO. 4
SECTION 1 - COVERED AUTOS is amended in part as follows:A. Description of Covered Auto Designation Symbols is amended by adding the following:
10. OWNED AUTOS AVAILABLE FOR SHORT-TERM RENTAL TO OTHERS
Only those autos' owned by the Named Insured and described in Item 3 of the Declarations, for which premium charge is shown (other than recreational vehicles which are excluded), and you use or have available for short-term rental to others, or additionally scheduled owned automobiles during the policy period.
ITEM THREE SCHEDULE OF COVERED AUTOS YOU OWNCoverage applies to those autos reported to us in accordance with the Reporting & Premium Endorsement.
* * * BUSINESS AUTO COVERAGE FORMThroughout this policy the words you' and your' refer to the Named Insured shown in the Declarations. The words we', us' and our' refer to the Company providing this insurance."
Plaintiff General Security Property & Casualty Company and American Fleet entered into an agreement entitled "Deductible Reimbursement and Security Agreement" (the "Deductible Agreement") in August 1997. The Deductible Agreement identified said plaintiff as the Company and American Fleet as the Insured and contained the following provisions:
"WHEREAS, the Company has, at the request of the Insured, issued certain insurance policies ... and may issue renewals and/or replacements of these policies [*4]...WHEREAS such Policies are subject to the deductibles per occurrence as set forth in the Policies, and the parties desire to establish procedures to reimburse the Company for all amount paid under the Policies within the deductible limits, as well as for all Allocated Loss Expenses, and;
NOW, THEREFORE, in consideration of the mutual promises contained herein; it is Agreed that:1.The Insured will reimburse the Company for all amounts paid under the Policies within the deductible, as set forth therein, plus all Allocated Loss Expenses.2.The limits of liability shown in the Policies, including the aggregate limits of liability, if any, shall be reduced by the application of the deductible amount.
* * * 18.This Agreement supersedes all previous agreements as to security for the policies, whether oral or written, between the Company and the Insured, and this Agreement constitutes the entire and sole contract between the parties as to the same subject matter and any prior statements, agreements or representations are merged herein. No amendment, rider or endorsement to this Agreement shall be effective, unless it is signed by the Company and the Insured and attached to this Agreement."
The Franchisees are additional insureds on the Policies. American Fleet was a corporation owned by various entities that originally employed the term "Rent-A-Wreck" in leasing vehicles. Assessments for insurance coverage for these lessors' vehicles were made by American Fleet against the lessors. From these assessments American Fleet made payments to plaintiffs for the premiums due under the Policies. This procedure was in effect for several years until one of the lessors incurred a substantial number of claims, which purportedly was the result of fraudulent conduct (Tr. pp. 7, 27, 31).
Plaintiffs contend that "American Fleet's designation as the Named Insured (in the Policies) is nothing more than a shorthand designation for the franchisees" (Plaintiffs' Memorandum of Law, p. 2); that the Policies provided for coverage of the Franchisees' cars, that American Fleet never owned any cars; that plaintiffs treated the Franchisees as if they were the named insured in adding or dropping them from the Policies (Webb EBT pp. 244-245, 247-250); that plaintiffs paid for the defense and settlement of claims made against the Franchisees; that Powell, Vista, Ross and Somers misrepresented to the Franchisees that they did not owe any deductible under the Policies; and that after American Fleet ceased active operation, the Franchisees owed the deductibles on which plaintiffs had advanced payment.
The Franchisee defendants contend that: the Policies are clear and unambiguous; that they [*5]define the Named Insured as American Fleet; that under the Policies, only the Named Insured was required to pay a deductible; that they were provided with coverage as additional insureds; that the Deductible Agreement sets forth the parties' agreement that the Insurer would set the amount of collateral for the deductible payments and that American Fleet was the party responsible for the deductible; that if any ambiguity exists, following the principle of construing the Policies and the Deductible Agreement against the Insurer warrants that any claims against said defendants be dismissed; that claims against Somers in his personal capacity should be dismissed since he acted solely as an officer of American Fleet; that quantum meruit claims against them should be dismissed since the provisions of the Policies and the Deductible Agreement govern the dispute; and that fraud and misrepresentation claims against them should be dismissed since the statements that the Franchisees were not required to pay any deductible under the Policies and the Deductible Agreement was true.
Since the Franchisees are not liable for any deductible, Powell, Vista, Ross, Summit and Fleet contend that the claims against them, that they falsely represented that the Franchisees had no obligation to pay deductibles, are devoid of merit.
In construing an insurance policy, "(w)here the provisions of the policy are clear and unambiguous, they much be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement.... The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured's favor and against the insurer" [United States Fidelity & Guaranty Co. v. Annunziata, 67 NY2d 229, 232 (1986)]. Moreover, "(a) court may not create policy terms by implication or rewrite an insurance contract.... Nor should a court reach to find an ambiguity where the policy language has a definite and precise meaning" [Adorable Coat Co., Inc. v. Connecticut Indemnity Company, 157 AD2d 366, 369 (1st Dept. 1990)]. See also, Bretton v. Mutual of Omaha Insurance Co., 110 AD2d 46 (1st Dept. 1985), aff'd. for the reasons stated, 66 NY2d 1020.
The Policies and the Deductible Agreement defined the Named Insured as American Fleet and placed the obligation to reimburse the Insurer for deductible payment on the Named Insured. They placed the obligation to provide collateral to secure the deductible payment on American Fleet, the Named Insured. While plaintiffs contend that the parties must have meant to include the Franchisees who are additional insureds under the Policies, "(t)he best evidence of what parties to a written agreement intend is what they say in their written agreement"[Slamow v. Del Col, 79 NY2d 1016, 1018 (1992)]. Additionally, there is generally "no basis for holding (a party) liable for the breach of a contract to which it is not a party"[Aces Mechanical Corp. v. Cohen Brothers Realty & Construction Corp., 136 AD2d 503, 504 (1st Dept. 1988)]. Therefore, plaintiffs' second cause of action for breach of contract against the Franchisees and Bronx is dismissed.
Plaintiffs' third cause of action for quantum meruit against the Franchisees and Bronx is dismissed since generally "to recover under a theory of quasi contract, a plaintiff must demonstrate that services were performed for the defendant resulting in its unjust enrichment.... It is not enough that defendant received a benefit from the activities of the plaintiff ...; if services were performed at the behest of someone other than the defendant, the plaintiff must look to that person for recovery"[Kagan v. K-Tel Entertainment, Inc., 172 AD2d 375, 376 (1st Dept. 1991)](emphasis in original). Moreover, since the Policies and the Deductible Agreement established the parties' relationship, "(i)t is impermissible ... to seek damages in an action sounding in quasi contract where [*6]the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties" [Clark-Fitzpatrick, Inc. v. Long Island Rail Road Company, 70 NY2d 382, 389 (1987)]. See also, MJM Advertising, Inc. v. Panasonic Industrial Company, 294 AD2d 265 (1st Dept. 2002).
In light of the foregoing holding that the Franchisees have no liability for the deductibles, plaintiffs' fifth, sixth, seventh, eighth and ninth causes of action for negligent misrepresentation and fraud against the defendants named therein are all dismissed.
In sum, the motion of American Fleet, Somers and the Franchisees to dismiss plaintiffs' second, third, fifth, sixth, seventh, eighth and ninth causes of action against them is granted; the cross-motion by Vista, Ross, Summit, Fleet and Powell to dismiss plaintiffs' fifth, sixth, seventh and ninth causes of action against them is granted; and the cross-motion by Bronx to dismiss plaintiffs' second and third cause of action against it is granted. Plaintiffs' cross-motion for partial summary judgment on liability on its second and third causes of action against the Franchisees and Bronx is denied. In view of the foregoing, the Clerk shall enter judgment dismissing the action as against the Franchisees, Fleet, Bronx and Powell, severing the remaining claims.
This decision constitutes the order of the court.
Dated: December 9, 2005________________
J.S.C.
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.
