Systematic Control Corp. v Liberty Mut. Group

[*1] Systematic Control Corp. v Liberty Mut. Group 2006 NY Slip Op 52455(U) [14 Misc 3d 1208(A)] Decided on November 27, 2006 Supreme Court, Nassau County Austin, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 27, 2006
Supreme Court, Nassau County

Systematic Control Corporation, Plaintiff,

against

Liberty Mutual Group, Defendant.



11147/05



COUNSEL FOR PLAINTIFF

Abraham B. Krieger, Esq.

98 Cutter Mill Road

Great Neck, New York 11021

COUNSEL FOR DEFENDANT

Jaffe & Asher, Esqs.

600 Third Avenue

New York, New York 10016

Leonard B. Austin, J.

Plaintiff Systematic Control Corporation ("Systematic") moves pursuant to CPLR 3212 for summary judgment against Defendant Liberty Mutual Fire Insurance Company incorrectly named herein as Liberty Mutual Group ("Liberty Mutual") in the amount of $70,766.72 and for a declaration that the contract of insurance issued by Liberty Mutual to Systematic was in full force and effect on August 23, 2003.

Defendant Liberty Mutual cross moves for summary judgment dismissing the amended complaint.

BACKGROUND

This dispute over insurance coverage arose after Systematic incurred damages in excess of $80,000 as a result of a fire at its Bayside premises (203-14 48th Avenue) on August 23, 2003. Despite due demand, Liberty Mutual has refused to pay Systematic under the additional extra expense provision of Liberty Mutual Commercial Lines policy No. YF2-121-083771-083/8 issued for the period March 15, 2003 through March 15, 2004. Extra expense coverage insures the additional costs an insured incurs in the event one of its business locations suffers a covered loss and the insured cannot operate out of that location; i.e., the cost of renting temporary space while a location is being repaired.

The total amount of the revised loss sustained by Systematic as a result of the fire is alleged to be $70,766.72. Liberty Mutual paid, without prejudice and on account, the sum of $25,000.00 against a claim originally in excess of $95,000.00. Liberty Mutual contends the claim is inflated and that some of the items for which Systematic seeks recovery are not, in any event, extra expenses covered under the terms and conditions of th extra expense provision of the subject insurance policy.

According to Plaintiff, Liberty Mutual "[w]ithout authority and without authorization * * * unilaterally, incorrectly and improperly deleted the $100,000 extra expense coverage from Plaintiff's policy." Plaintiff further claims that, notwithstanding its letter to Liberty Mutual dated June 3, 2003 which reads, in pertinent part:

"As soon as I have reviewed your schedule of the insurance coverage now being provided by Liberty with my accountant, I shall contact you. Whatever changes are to be made I shall forward to you on my letterhead as you requested",

Liberty Mutual reduced Plaintiff's coverage without any justifiable, sound reason or foundation.

Liberty Mutual counters that it acted on Plaintiff's oral request that the extra expense coverage under the policy be eliminated to reflect the policy minimum of $25,000 which request was made at a meeting on June 2, 2003 between Plaintiff and Robert Russell, a Liberty Mutual sales account representative.

DISCUSSION[*2]

On a motion for summary judgment, the movant has the initial burden of setting forth evidentiary facts sufficient to establish its entitlement to summary judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986). Failure to make such a showing requires denial of the motion regardless of the sufficiency of the opposing papers. JMD Holding Corp. v. Congress Financial Corp., 4 NY3d 373, 384 (2005); and Ayotte v. Gerasio, 81 NY2d 1062 (1993). For a movant to prevail it must clearly appear that no material and triable issue of fact is presented. Jablonski v. Rapalje, 14 AD3d 484, 486 (2nd Dept. 2005). If there is any doubt as to the existence of a triable issue, the motion should be denied. Sheehan v. Gong, 2 AD3d 166, 168 (1st Dept. 2003); and Rotuba Extruders, Inc. v. Ceppos, 46 NY2d 223 (1978). It is not the court's function to assess the credibility of the various parties vis-a-vis the arguments for or against summary judgment. Ferrante v. American Lung Assn., 90 NY2d 623, 631 (1997).

Here, each party contends that it is entitled to relief as a matter of law. Systematic's position is that, pursuant to the understanding between it and Liberty Mutual's sales account representative, any changes, cancellations or reductions with respect to its policy had to be made in writing on Systematic's letterhead. Conversely, Liberty Mutual asserts that no such writing was required and that Plaintiff's president, Neil Carbone, against Mr. Russell's advice, specifically authorized the removal of the additional extra expense coverage at the June 2, 2003 meeting. Liberty Mutual further contends that, at that same meeting, Mr. Carbone also directed a reduction in the personal property coverage limits from $100,000 to $50,000 for Systematic's location No.2 at 92 Northern Boulevard, Great Neck, New York.

The parties' contradictory contentions, however, clearly raise a triable issue of fact as to whether or not Plaintiff authorized the deletion of the additional extra expense coverage and the extent to which Plaintiff is entitled to reimbursement from Liberty Mutual. Thus, neither side is entitled to summary judgment.

It is undisputed that on June 19, 2003, Liberty Mutual issued Endorsement 8 (eliminating the additional extra expense coverage and reducing the personal property limits on the second location) to Systematic's policy resulting in a credit to Plaintiff's account in the amount of $2,695.20. When asked at his deposition whether, as a matter of company policy, a writing was necessary in order to effectuate a material change "either extending coverage, terminating coverage, reducing coverage," Mr. Russell, Liberty Mutual's account sales representative, initially answered in the affirmative. As set forth on the errata sheet to his deposition transcript, the full amended answer reads "Yes, or alternatively, confirmed in writing by Liberty Mutual."

In a taped conversation with Plaintiff, which occurred after the fire on October 27, 2003, Mr. Russell states, inter alia, that if Defendant did not receive a letter from Systematic requesting that the additional extra-expense coverage be removed "it shouldn't have been taken off." The statement constitutes an admission, by a longstanding Liberty Mutual employee, against his employer's position on this motion. Although Mr. Russell alleges the conversation "was a clear set-up, trying to entrap me," he spoke as a Liberty Mutual employee who testified that it was his responsibility to communicate with Systematic concerning renewal of coverage with Defendant insurer. As part of this process, Mr. Russell met with the president of Systematic on June 3, 2003, at which time they discussed the different components of the premium calculation and the function of extra expense coverage. In his conversations with Systematic's president, Mr. Russell obviously possessed the requisite authority to speak on behalf of, [*3]

and to bind, his employer, Liberty Mutual.

While as a general proposition, a party who receives the declarations page(s) and insurance policy is conclusively presumed to know the terms of the renewed policy (Noroian v. Cohen, 7 AD3d 288, 289 [1st Dept. 2004]), Plaintiff's submissions raise an issue of fact as to whether, in renewing the Commercial Lines policy issued to Systematic, Liberty Mutual acted in accordance with the terms agreed upon by Plaintiff and Defendant's agent, Robert Russell and whether Plaintiff received the declarations page before the fire. The existence of such questions preclude a grant of summary judgment in favor of either movant.

Accordingly, it is,

ORDERED, that Plaintiff's motion for summary judgment is denied; and it is further,

ORDERED, that Defendant's cross-motion for summary judgment is denied; and it is further,

ORDERED, that counsel for the parties ate directed to appear for a preliminary conference on December 20, 2006 at 9:30 a.m.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY_____________________________

November 27, 2006Hon. LEONARD B. AUSTIN, J.S.C.