Belesi & Conroy, P.C. v American Guar. & Liab. Ins. Co.
Annotate this CaseDecided on December 15, 2008
Supreme Court, Nassau County
Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f/k/a Belesi & Donovan, P.C. John M. Belesi and Matthew J. Conroy, Plaintiff,
against
American Guarantee & Liability Insurance Company, Defendant.
8288/08
Antonio I. Brandveen, J.
The plaintiffs move to amend the caption pursuant to CPLR 3025 adding Tina M.
Tapinekis and Mattarazzo & Blumberg, LLP as defendants; staying the matter styled Tina M. Tapinekis
v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John
M. Belesi and Matthew J. Conroy, Nassau Supreme Court Index No. 5510/06, currently pending in
the DCM Part of Supreme Court Nassau County on July 28, 2008; granting summary judgment in
favor of the plaintiffs pursuant to CPLR 3212, and declaring the defendant American Guarantee &
Liability Insurance Company is obligated to indemnify and defend the plaintiffs Belesi & Conroy, P.C.
f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J.
Conroy in the matter styled Tina M.Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan &
Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy, bearing Nassau
Supreme Court Index No. 5510/06, and are resume doing so immediately. The defendant American
Guarantee & Liability Insurance Company oppose the plaintiff's motion and cross move for an order
compelling the plaintiffs to comply with the defendant's first notice for discovery and inspection of
documents dated May 27, 2008, together with costs and disbursements of this motion. The underlying
insurance coverage dispute arises under a lawyers professional liability insurance policy issued by the
defendant to the plaintiff law, Belesi & Conroy, P.C., where the defendant denied insurance coverage
to the plaintiffs with respect to a legal [*2]malpractice action captioned
Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi &
Donovan, P.C., John M. Belesi and Matthew J. Conroy, Nassau Supreme Court Index No. 5510/06.
This Court has carefully reviewed all of the papers submitted with respect to this motion and the cross
motion.
The plaintiffs' attorney states, in a supporting affirmation, to the plaintiffs' motion, the plaintiffs brought this action for a declaratory judgment pursuant to CPLR 3001. The plaintiffs' attorney states the plaintiffs purchased a Lawyers Professional Liability Insurance policy numbered xxx xxxxxx with a policy period of August 15, 2005 through August 15, 2006, from the defendant. The plaintiffs' attorney states that policy was in full force and effect; all premiums paid; and the plaintiffs were not in breach of any pertinent term or condition of that policy when on or about April 20, 2006, the plaintiffs were served with a complaint in an action entitled Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy, Nassau Supreme Court Index No. 5510/06. The plaintiffs' attorney claims that other lawsuit was based upon the plaintiffs' failure to timely commence a first party property damage insurance claim against Allstate Insurance Company within the time limits set forth in a certain Homeowner's Insurance Policy. The plaintiffs' attorney alleges the plaintiffs hand delivered a copy of the complaint with cover letter to the defendant on April 21, 2006, at its offices at One Liberty Plaza, 165 Broadway, New York, New York, and on April 28, 2006, the defendant engaged the law firm of L'Abbate, Balkan, Colavita & Contini, LLP to defend the plaintiffs in the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action. The plaintiffs' attorney states, pursuant to the terms of the policy, the plaintiffs were charged, and paid 50% of the deductible as a claims expense. The plaintiffs' attorney grants the defendant, through its parent company, Zurich North America, issued a letter of reservation of rights under the policy, states on or about December 27, 2006, the Tina M. Tapinekis' underlying action against Allstate Insurance Company was dismissed, and on or about February 20, 2007, by letter from Steinberg and Cavaliere, LLP, the defendant denied coverage under the policy.
The plaintiffs' attorney states the defendant did not timely disclaim coverage. The plaintiffs' attorney states each operative fact contained in a July 10, 2006 reservation letter was known to the defendant insurer at the time of the delivery of the April 21, 2006 summons and complaint. The plaintiffs' attorney asserts the insurer unreasonably delayed in issuing the purported reservation of right, and the defendant retained counsel to defend and proceeded to litigate the matter until the disclaimer of coverage on February 20, 2007, ten months after receiving notice. The plaintiffs' attorney avers the plaintiffs were required to proceed with the lawsuit and conduct discovery under the impression they were first receiving a complete defense and indemnification, and then, at least, a complete defense to this action, only to have it stripped away. The plaintiffs' attorney notes the [*3]defendant's disclaimer came on the eve of court ordered depositions, and left the plaintiffs in a severe bind to secure counsel to represent them at the depositions.
The plaintiffs' attorney states Mattarazzo & Blumberg, LLP and Tina M. Tapinekis should be added as defendants to this lawsuit. The plaintiffs' attorney states it is well settled pursuant to CPLR 3025 leave to amend pleadings will be freely granted. The plaintiffs' attorney asserts Mattarazzo & Blumberg, LLP and Tina M. Tapinekis are united in interest with the parties in the declaratory judgment matter. The plaintiffs' attorney avers the Court should permit service of an amended summons and complaint to add Mattarazzo & Blumberg, LLP and Tina M. Tapinekis as additional defendants, and the caption should be amended as indicated in the affirmation of the plaintiffs' attorney.
The plaintiffs' attorney states the trial of the declaratory action should be stayed until the issues of defense and indemnification can be determined. The plaintiffs' attorney opines the stay is in the interests of all of the parties to the action.
The defense attorney states, in an opposing affirmation dated August 20, 2008, to the plaintiffs' motion, the relief sought by the plaintiffs is brought before any discovery or depositions have been taken. The defense attorney notes the plaintiffs do not contend, in support of the request for summary judgment, the basis of the defendant's denial of coverage is the plaintiffs' failure to provide the defendant with immediate notice of a potential claim, in violation of a notice condition in the professional liability policy. The defense attorney points out the plaintiffs' sole argument is the defendant should be estopped from denying coverage because its disclaimer letter to the plaintiffs was untimely. The defense attorney disagrees, and states, based upon the documents submitted in connection with the plaintiffs' motion, and as a matter of law, the plaintiffs' un-pleaded estoppel theory is baseless.
The defense attorney states the plaintiffs' motion indicates the plaintiffs were served with the legal malpractice complaint on or about April 20, 2006, based upon the plaintiffs' failure to timely commence those plaintiffs' property damage insurance claim against Allstate Insurance Company, yet the defendant's first notice of anything pertaining to that legal malpractice complaint occurred when the plaintiffs delivered a copy of the legal malpractice complaint to the defendant on or about April 21, 2006. The defense attorney reports, at the time the other lawsuit commenced against the plaintiffs and reported to the defendant in late April 2006, the property damage insurance action which the plaintiffs brought against Allstate Insurance Company was still pending. The defense attorney avers the insurance action against Allstate Insurance Company was filed in 2005, but was not dismissed until on or about December 27, 2006, so when the defendant was presented with the legal malpractice complaint, the insurance against Allstate Insurance Company was still an allegation, and the action against Allstate Insurance Company was proceeding. The defense attorney states, after consulting with the affirmant's office, the defendant assigned defense counsel to represent the plaintiffs in the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, [*4]P.C., John M. Belesi and Matthew J. Conroy action, subject to a reservation of rights, and to monitor developments in the action against Allstate Insurance Company. The defense attorney states the defendant advised the plaintiffs by letter dated July 10, 2006, the defendant reserved its coverage rights generally, and on specific grounds, including the plaintiffs' late notice of a potential claim.
The defense attorney states, even if the defendant's purported in denying coverage were a relevant consideration which it is not because of the reservation letter, there was no unreasonable delay by the defendant in denying coverage. The defense attorney maintains, contrary to the plaintiffs' assertions, a significant event occurred between the time of the defendant's July 10, 2006 reservation of rights letter, and its February 20, 2007 disclaimer letter, to wit the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action was dismissed in late December 2006 solely because of the plaintiffs' failure to timely commence that action. The defense attorney avers, even if the defendant's purported delay in issuing the disclaimer letter were a relevant consideration, there is a reasonable explanation for that delay. The defense attorney contends the plaintiffs' motion does not demonstrate any actual prejudice suffered by the plaintiffs due to the defendant's conduct, rather the defendant disclaimed before that case was placed on the trial calendar, and the plaintiffs do not complain the defense counsel assigned by the defendant to the plaintiffs mishandled the other matter. The defense attorney contends the case law cited by the plaintiffs' is inapposite because those cases dealt with the statutory obligation of a liability insurer pursuant to New York Insurance Law § 3420 (d), to wit disclaimer as soon as reasonably possible for bodily injury or death claims arising from accident occurring in the State of New York.
The defense attorney states, in a supporting affirmation dated August 7, 2008, to the cross motion, the defendant denied coverage of the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action because the plaintiffs violated a condition of the insurance policy requiring immediate notice of a potential claim pertaining to the events leading to the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action. The defense attorney points out the plaintiffs have not provided the defendant with documents in response to the defense first notice for discovery and inspection of documents dated May 27, 2008, nor have the plaintiffs asserted any objections to the defense document demand. The defense attorney asserts the defense demand seeks relevant documents pertaining to the events leading to the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action, as well as documents from that action. The defense attorney avers such documents are anticipated to support or bolster the defendant's late notice coverage defense with respect to the Tina M. Tapinekis v. Belesi [*5]& Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action, and as such, those documents are clearly relevant to the issues in this instant lawsuit.
The plaintiffs' attorney states, in a reply affirmation dated September 19, 2008, and in limited opposition to the cross motion, nowhere in the defense opposition is it stated coverage for the plaintiffs' claim did not exist, rather the defendant argues the timeliness of the denial of insurance coverage. The plaintiffs' attorney indicates the defendant concedes the plaintiffs purchased the Lawyers Professional Liability Insurance policy numbered xxx xxxxxxx from the defendant. The plaintiffs' attorney asserts that policy was in full force and effect with all premiums paid without any breach by the plaintiffs when on or about April 20, 2006, the plaintiffs were served with a complaint in the Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy action. The plaintiffs' attorney avers the defense attempts to explain the defendant's delay in denying coverage as reasonable is legally insufficient. The plaintiffs' attorney posits the explanation of the defendant's decision to disclaim coverage was based solely upon the result of the underlying case, to wit the exposure to the insurance carrier, and that decision had nothing to do with the coverage issues raised in the reservation of rights nor the disclaimer of coverage. The plaintiffs' attorney maintains the defense reliance on federal court decisions is misplaced regarding the distinction between bodily injury claims and legal malpractice claims incorporating the extra element of prejudice to the insured in a legal malpractice coverage claim. The plaintiffs' attorney contends the plaintiffs have clearly established each of the elements of a prima facie case, and further demonstrated there are no viable defenses available to the defendant, so there are no material facts in dispute. The plaintiffs' attorney states the plaintiffs are entitled judgment as a matter of law. The plaintiffs' attorney points out, with regard to the defense cross motion, the defendant concurs with the request to stay the underlying matter pending the outcome of the instant declaratory action, and the defendants do not object to being added as parties to this action.
That branch of the plaintiffs' motion to amend the caption to add Tina M. Tapinekis and Mattarazzo & Blumberg, LLP as defendants is granted under CPLR 3025. The plaintiffs' motion to stay the matter styled Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f\k\a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy, Nassau Supreme Court Index No. 5510/06 is denied.
Under CPLR 3212 (b), a motion for summary judgment "shall show that there is no defense to the cause of action or that the cause of action or defense has no merit. The motion shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party ... [T]he motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact." Summary judgment is a [*6]drastic remedy that is awarded only when it is clear that no triable issue of fact exists (Alvarez v Prospect Hosp., 68 NY2d 320, 325; Andre v Pomeroy, 35 NY2d 361). Summary judgment is the procedural equivalent of a trial (Museums at Stony Brook v Village of Patchogue Fire Dept., 146 AD2d 572). Thus, the burden falls upon the moving party to demonstrate that, on the facts, it is entitled to judgment as a matter of law (see, Whelan v GTE Sylvania, 182 AD2d 446). Here, in view of the applicable legal standards, plaintiffs' causes of action can be sustained. The complaint must not be dismissed. The court's role is issue finding rather than issue determination (see, e.g., Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Gervasio v Di Napoli, 134 AD2d 235, 236; Assing v United Rubber Supply Co., 126 AD2d 590). Nevertheless, " the court must evaluate whether the alleged factual issues presented are genuine or unsubstantiated' " (Gervasio v Di Napoli, supra, 134 AD2d, at 236, quoting Assing v United Rubber Supply Co., supra; see, Columbus Trust Co. v Campolo, 110 AD2d 616, affd 66 NY2d 701). If the issue claimed to exist is not genuine and, therefore, there is nothing to be resolved at the trial, the case should be summarily decided (see, Andre v Pomeroy, 35 NY3d, supra, at 364; Assing v United Rubber Supply Co., supra). Here, the plaintiffs have not demonstrated that, the facts, any of them is entitled to judgment as a matter of law under CPLR 3212 (b). There is a triable issue of fact which requires resolution by the trier of fact. That branch of the plaintiffs' motion is denied seeking summary judgment in favor of the plantiffs, and, at this time, declaring the defendant American Guarantee & Liability Insurance Company is obligated to indemnify and defend the plaintiffs Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f/k/a Belesi & Donovan, p.C., John M. Belesi and Matthew J. Conroy in the matter of styled Tina M. Tapinekis v. Belesi & Conroy, P.C. f/k/a Belesi, Donovan & Conroy, P.C. f/k/a Belesi & Donovan, P.C., John M. Belesi and Matthew J. Conroy, bearing Nassau Supreme Court Index No. 5510/06.
The court finds the plaintiffs have not comply with the defense defendant's first notice for discovery and inspection of documents dated May 27, 2008. The Court determines, as a matter of law, the plaintiffs must comply with that May 27, 2008 first notice for discovery and inspection of documents.
Accordingly, the plaintiffs' motion is granted solely to the extent of permitting amendment to the caption to add Tina M. Tapinekis and Mattarazzo & Blumberg, LLP as defendants, and the defense cross motion to compel the plaintiffs to comply with the defedant's first notice for discovery and inspection of documents dated May 27, 2008 is granted without costs and disbursements.
So ordered.
December 15, 2008
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