Stephan v Clarendon Natl. Ins.

[*1] Stephan v Clarendon Natl. Ins. 2010 NY Slip Op 50670(U) [27 Misc 3d 1210(A)] Decided on March 8, 2010 Civil Court Of The City Of New York, New York County Kennedy, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 8, 2010
Civil Court of the City of New York, New York County

Peter Stephan, Plaintiff,

against

Clarendon National Insurance, Defendant.



023687/08



Attorney for Plaintiff: Allan J. Berlowitz, Esq. & Teresa Rosen Peacocke; Attorney for Defendant: Timothy J. Valdez, of Law Offices of Brian J. McGovern, LLC

Tanya R. Kennedy, J.

On May 11, 2007, plaintiff was involved in a motor vehicle accident while operating his 1989 BMW E 30 vehicle during the Ultimate Driver's School event at Watkins Glen, New York, a world famous racetrack which has been the site of the Grand Prix and other historic races since the late 1940's (see Plaintiff's Exhibit 3 in Evidence).

The driver's school event was sponsored by the Genesee Valley BMW Car Club of [*2]America (hereinafter BMW CCA), which is comprised of over 1,400 BMW automobile enthusiasts in the Western New York Region (see Plaintiff's Exhibit 3 in Evidence). The driver's school was a three-day weekend event which consisted of alternate classroom and track sessions. Driver school participants were required to wear helmets at the event and received a written student packet which advised that while driving sessions would occur on a race track, that racing was prohibited (see Plaintiff's Exhibit 3 in Evidence). Both plaintiff and his witness, David Weaver, an instructor at the driving school, testified that the purpose of the school was to improve driving skills in a controlled environment.

At the time of the accident, plaintiff was an advanced driving student who was permitted to drive without an instructor. According to plaintiff, the front tire on the driver's side went onto the grass shoulder as plaintiff was maneuvering a turn at an exit and subsequently spun onto the other side and hit the guardrail in his attempt to steer the BMW back onto the track, which resulted in a total loss to the vehicle. Plaintiff estimated that he was traveling at approximately 50-70 miles per hour at the time of the accident. Additionally, plaintiff maintained that no other vehicles were in proximity to his BMW at the time of the accident and that no timing devices were used on the racetrack. There were no witnesses to this accident.

Defendant issued an insurance policy to plaintiff for the subject BMW, which was in effect on the date of the accident. However, defendant subsequently advised plaintiff in a February 18, 2008 letter that it disclaimed coverage due to the fact that plaintiff's claim was beyond the scope of coverage pursuant to the following provision of its insurance policy: Section III. COVERAGES (B. COLLISION AND COMPREHENSIVE COVERAGE)Exclusions — What is not coveredThere is no collision or comprehensive coverage for the following:g. Loss to any auto or trailer while inside any racing facility for the purpose of practicing for, preparing for, or participating in any prearranged or organized racing or speeding contest.

(see Defendant's Exhibits I and K in Evidence).

Defendant's investigation of the accident revealed, inter alia, that the accident occurred at a racetrack and that the subject vehicle was "enhanced by the prior owner," "equipped for racing" and "loaded with aftermarket racing parts" (see Plaintiff's Exhibit 17 in Evidence).

DISCUSSION

The issue presented before the Court at trial was whether plaintiff's operation of a vehicle during an automobile club sponsored driver's school event located at a racing facility constituted "practicing for, preparing for, or participating in any prearranged or organized racing or speeding contest" as defined by the terms of defendant's policy.

In order "[t]o negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652 [1993]). Policy exclusions are to be strictly construed (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984]), with any ambiguity to be resolved against the insurer [*3](see Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [1983]). However, where a insurance provision is clear and unambiguous, its terms must be enforced according to its plain and ordinary meaning (see United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [1986]). While there is no dispute that the subject exclusion is clear and unambiguous, plaintiff contends that defendant failed to meet its burden in establishing that the exclusion is applicable herein.

Although it appears that no court in this state has ruled on this issue, the Court adopts the reasoning set forth by the Superior Court of Massachusetts in Metropolitan Prop. and Cas. Ins. Co. v Stevens (10 Mass. L. Rptr. 729 [Mass Super 1999]) and by the Court of Appeals of Georgia in Progressive American Ins. Co. v Horde (259 Ga. App 769, 577 N.E.2d 835 [2003]) and concludes that defendant met its burden in establishing that plaintiff's loss fell within defendant's policy exclusion.[FN1]

In Metropolitan, the insured's policy excluded coverage for losses which occurred during "any pre-arranged or organized racing, speed or demolition contest or in practice or preparation for any such contest." The insured in Metropolitan was participating in the Metro NY Porsche Club of America Driver Education Event at the Bridgehampton Speedway when he lost control of his vehicle and hit a shoulder of the racetrack while entering a corner on the racetrack in excess of 70 miles per hour. Additionally, the insured in Metropolitan made a number of improvements at a cost of $9,000.00 to improve the vehicle's handling at greater speeds.

Although the insured in Metropolitan was advised prior to his participation at the club event that such event would not be covered under the insurance policy, the insured misrepresented the nature of the accident by failing to inform defendant that the incident occurred on a racetrack. The insured in Metropolitan, who was permitted to drive unaccompanied as an advance driver, claimed that the club did not permit timing during the event and that the purpose of the event was to improve driving skills in a safe and controlled environment. However, the court in Metropolitan rejected such assertion by concluding that the insured was engaged in racing regardless of the term he used to describe the event.

Similarly, in Progressive, the policy at issue excluded coverage for losses "resulting from any pre-arranged or organized racing, speed or demolition contest, stunting activity, or in practice or preparation for any such contest or activity." The insured in Progressive was an advanced "A" rated driver who crashed his vehicle into a racetrack retaining wall while traveling in excess of 140 miles per hour on the Road Atlanta Racetrack during participation at a three-day racing class sponsored by the Panoz Racing School in which the purpose of such class was to teach students skills necessary to operate a vehicle at certain speeds over a racing circuit. Additionally, the insured in Progressive acknowledged that he modified his vehicle for racing, that he applied for a competition license and obtained a physical examination in support of such application, and that he wished to race competitively in the future.

Although the insured in Progressive maintained that the insurer acted in bad faith by denying coverage, the court therein interpreted the contract in its entirety, read such agreement as would the average person, and concluded that the insured was "practicing or preparing for racing activity within the meaning of the policy exclusion at issue prior to and at the time of collision [*4]with a fixed object" (id. at 769).

The 1989 BMW E 30 vehicle is characterized as a "street-legal version of the marque's racing car," with such advantages as "real racing heritage," "strong performance," and "active club support" (see Defendant's Exhibit F in Evidence). Such vehicles are often modified which result in a faster performance on the track (see Defendant's Exhibit F in Evidence). Although plaintiff testified that he only used his BMW for pleasure to drive on country roads or public highways, the Court did not find such testimony to be credible. Plaintiff has held himself out to the world as an amateur racer with fifteen (15) years experience (see Defendant's Exhibit D in Evidence). Additionally, plaintiff has participated in at least twelve (12) BMW CCA driving events prior to the May 11, 2007 accident as a member of BMW CCA or Sports Car Club of America.

Further, plaintiff acknowledged during trial that the prior owner modified the vehicle by removing the rear seats, replacing the original front stock seats with racing seats, installing a roll-bar and cage (which was bolted into the car frame), modifying the hose and engine, replacing the tires and wheels with those used for racing and installing an additional 4-point harness seat belt system, which holds a driver into her/her seat. Plaintiff also acknowledged at trial that removing the rear seats would cause the vehicle to travel faster and that he never replaced such seats in the BMW after purchase. Although plaintiff testified that the prior owner provided him with the original stock tires, wheels and seats, plaintiff also indicated that he never used these items.

During cross-examination, plaintiff initially testified that the prior owner removed the rear seats because the owner used the BMW for auto cross racing. However, plaintiff subsequently testified during cross examination that he was unaware as to the reason why the prior owner removed the rear seats and that plaintiff assumed that the BMW was involved in auto cross racing, which the Court found incredible. Similarly, the Court found as incredible plaintiff's testimony that he was unaware as to the reason why the prior owner installed a 4-point harness system into the BMW.

Plaintiff's counsel contends in his post-trial memorandum that the aforementioned cases are inapplicable since (1) the purpose of the driver's school was "awareness" and not speed; (2) racing was prohibited at the event; (3) no timing devices were utilized; and (4) no vehicles were in close proximity to plaintiff's BMW at the time of the accident.

Plaintiff's counsel also addresses the fact that plaintiff was operating his vehicle at a lesser speed than the vehicle in the Progressive case. However, the fact that plaintiff was not traveling in excess of 100 miles per hour does not prevent the Court from concluding that plaintiff's loss fell within the terms of the subject policy exclusion. The totality of the circumstances clearly establish that plaintiff's operation of a vehicle during an automobile club sponsored driver's school event located at a racing facility constituted "practicing for, preparing for, or participating in any prearranged or organized racing or speeding contest"as defined by the terms of defendant's policy.

As the court stated in Metropolitan, "[j]ust as a rose by any other name is still a rose, so a race by any other name is still a race; so much like a race that any damage to vehicles, or personal injury, are outside insurance coverage" (supra at fn 4).

Therefore, in light of the above, the Court dismisses the complaint.

The Clerk is directed to enter judgment accordingly. [*5]

This constitutes the decision and order of the Court.

Dated:New York, New York

March 8, 2010

___________________________________

Judge of the Civil Court

. Footnotes

Footnote 1: Defendant cited these cases in its trial memorandum.