Praetorian Ins. Co. v DMHZ Corp.

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Praetorian Ins. Co. v DMHZ Corp. 2012 NY Slip Op 33032(U) December 19, 2012 Sup Ct, New York County Docket Number: 101469/10 Judge: Barbara Jaffe Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] ' ! SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PART Justice 1 _ I Index Number: 101469/2010 PRAETORIAN INS. CO. vs. DMHZ CORP. SEQUENCE NUMBER : 004 - MOTION DATE MOTION SEQ.NO. Oc$ REARGUMENT/RECONSIDERATION The following papers, numbered 1 to ,were read on this motion tolfor Notice of MotionlOrder to Show Cause -Affidavits Answering Affidavits - Exhibits - Exhibits Replying Affidavits Upon the foregoing papers, it is ordered that this motion is C1" ,J.S.C. Dated: 1. CHECK ONE: ..................................................................... CASE DISPOSED .............. MOTION IS: GRANTED 3. CHECK IF APPROPRIATE: ................................................ 0SETTLE ORDER 2. CHECK AS APPROPRIATE: 0DO NOT POST A DENIED INAL DISPOSITION GRANTED IN PART 0OTHER 0SUBMIT ORDER FIDUCIARY APPOINTMENT REFERENCE [* 2] Interpleader Plaintill, -against- Index No. 10 1469/ 10 Mot. scq. no. Argued: DMHZ CORPOI1AT'ION, YOU QUN LIU, MAN I E N G ZHENG, WE1 LIN, an infant by his father and natural guardian, QI MAN LIN, QI MAN IJN, individually, DONG YONG Ql, AN RU LIN, SA1 ZHU DONG, XIAO RONG, FEI ZIIOII, JIN YUN LIN, JACQUELINE GALLO, NICHOLAS FRIEDMANN, ERIN SPADOLA, THOMAS PASTRO, JOSEPH TIRABASST, ANJA DORNIEDEN, ANNIE LING, ANNA MY LUU deceased, by ANNIE LUU and ANNETTE PITTMAN as, Co-hdministratrixes of the Estate of ANNA MY LU TONY WONG deceased, by LUCKIE KO, as of the Estate of TONY WONG and LUCKIE KO, individually, TRAVELERS INSURANCE GROUP, as subrogee of. DEC 2 1 2012 MATTHEW GROS-WERTER, ZHEN GUANG LIN, Jane Doe(s), John Doe(s) and Doe Company(ies), the l a t t e r N ~ y o R K three parties being fktitious and intended to name fitcLERm claimants yet unknown, For interpleader plaintiff: Bcn.jainin A. Fleischncr, Esq. White Fleischner & Fino, LLP 61 Broadway New York, N Y 10006 2 12-487-9700 004 5130112 I For interpleader defendants Luii, Pittman, Wong and KO: Marie Ng, Esq. Sullivan Papain, Block McGrath & Cannavo, PC I20 Broadway New York, NY 1027 1 2 12-732-9000 For interpleader defendant DMHZ Corp.: Michael R. Manarel, Esq. Rita W. Gordon, Esq. Jones Hirsch Connors & Hull, PC Onc Battery Park Plaza New York, N Y IO004 2 I 2-527- IO00 By notice of. motion datcd January 3 1, 20 12, interpleader defendant DMHZ Corporation [* 3] *.- (DMHZ) moves pursuant to CPLR 2221(d) for an order granting it leavc to reargue the May 1 6 20 1 1 decision and September 6,20 I 1 order of the justice previously assigned to this action and, upon reargumciit, for an ordcr denying interpleader plaintiff Praetorian Insurancc Company (Praetorian) costs, disburscrnents, and attorncy fees attributable to this action. That branch of DMHZ s motion seeking leave to reargue the May 16, 201 1 decision and Septcinber 6, 201 1 order requiring notice to the tenants of 22 James Street, New York, New York, was withdrawn at oral argument. (See DMHZ Reply Aff., 7 3; Tr., at 3). Praetorian otherwise opposcs. Praetorian cross-moves fbr an order directing it to retain to the credit of this action the $1 inillion procccds of thc sub+jectPraetorian policy, less the amount of reasonable costs and fees, discharging it from liability as to the interpleader defendants and any other potential claims with respect to the instant matter, and dismissing all counterclaims against it. DMHZ and interpleader defendants I,uu, Pittinan, Wong, and KO opposc. I. BACKGROUND Faniiliarity with the previously assigned justice s prior decision, datcd May 16, 201 1, as amended by decision dated September 2,201 1, and order dated September 6,201 1 (motion sequence 003) is presumed. On or about October 17, 201 2, I was assigned to Part 12 where this action pends. Praetorian issucd a $1 million per occurrence liability insurance policy, no. H543002984, to DMHZ, effective from August 18, 2008 to Aiigusl 18, 2009, covering an apartment building owncd by DMHZ and located at 22 Jamcs Strcct, dWa 45 St. James Place, New York, New York. On February 24, 2009, a fire occurred at the premises, rcsulting in deaths, personal injuries, and property damage to tcnants and occupants o l the premises. The victims of tlic firc or their estates 2 [* 4] cornmeiiced three lawsuits against DMHZ in Supreme Court, New York County, now consolidated under You Qun Lizr v IIMHZ Cory., index no. 104930/09. Praetorian brings this interpleader action seeking an order determining the distribution and priority of settlement of the insuraiicu f h d s available under the policy. Relying on CPLR 1006(f), the previously assigncd justice, in his May 16 decision, authorized Praetorian to retain the $1 million to the credit of the action, and held that Praetorian was entitled to costs and fees charged against the $1 million, noting that Praetorian had no independent liability and that although it had not been forced to coinmcncc an interpleader action, its commeiiceineiit of thc action (coinports with the spirit and intendrncnt of CPLR 1006, which is to protect stakeholders from multiple adverse claims to funds in issue. He also held that Praetorian is entitlcd to costs, disbursements, and reasonable attorney fees for prosecuting the interpleader action. The dccision granting the motion was conditioned on Praetorian notifying the tenants of the premises that an action had been commenced. By order dated September 2, 201 1 and entered September 9, 201 1, the May 16,201 1 decision was amended to the cxtcnt that Praetorian was permitted to serve the tenants with notice of the action afler entry of tlic order. In that order, dated September 6, 20 1 1, Praetorian was ordered, among other things, to also notify all persons who may have been tenants or occupants of the premises that the action had been commenced, and then move for an order discharging it from liability as to the interpleader defendants and any other potential claimants with respect to the incident, and awarding it costs and fees, thc amount of which was to be dctcrinined by thc court, chargcd against the $1 million. 3 [* 5] 11. DISCUSSION A. Motion to reargue A motion for leavc to reargue must be based upon niattcrs of fact or law allegedly ~ I ovcrlookcd or niisapprchcnded by thc court in dctcrininiiig the prior motion, but shall not include any niatters of fact not offered on the prior motion (CPLR 2221 Id1[2]; Pryor v Commonwealth Land Tit /n.s, ( a ,17 AD3d 434,435-436 12d Dept 20051). Whethcr to grant re-argument is committed to the sound discretion of the court, and a motion to re-argue may not serve as a vehicle to permit the unsuccessful party to argue once again the very questions previously decided. (Fo/ey v Roche, 68 AD2d 558, 567-568 [ lqtDept 19791, lv denied 56 NY2d 507 !:I 9823). Nor may the movant advance new arguments not previously presented. (Kent v 534 E. ll St., 80 AD3d 106 [ l Dept 20101; Mminov v ReZZa, 79 AD3d 979 [2d Dept 20101). DMHZ maintains that the prior justice overlooked or misapprehended authority for the proposition that an award oflitigation costs and fees to a stakeholder is inappropriate where such costs and fees are part of the ordinary cost of doing business and where an interpleader action is brought in the stakeholder s own self-interest. It relies primarily on federal case law. (Affirmation of Michael R. Manarel, Esq., dated Jan. 3 1, 2012). Praetorian denies that it commenced the intcrpleader action in thc usual course of its business or in its own self-intercst. Rathcr, it maintains that it did so out of a concern that tlie policy limit and number ofpotential and serious claims would forcc it to pay out insurance procceds to the lirst-in-time claimants in a manner that could deprive later claimants of any rccovcry. (Affirmation olJariet P. Ford, Esq., dated Feb. 13, 2012). As the previously assigned justice does not mention in his order the federal case law cited 4 [* 6] by DMI-IZ in its original opposition papers, DMHZ has establislicd that there exist inattcrs of law overlookcd by the court. 1,eave to reargue on this issue is thus granted. Federal casc law on interpleader relies on and interprets the fkderal intcrpleader statute, 28 USC 1335, which is silent on the issue of litigation expenses (see t'.g Trnvelurs Indem. ('0.v Israel, 354 F2d 488, 490 [2d Cir 19651; Commercial Union Life Ins. Co. v Almonor, 1999 WI, 292562, "1, 1999 IJS Dist LEXIS 6857, "3-4 [ SD N Y 1999]), and federal courts have disallowed litigation expenses on the rationalc that they are part of an insurancc company's ordinary cost of ' doing business (see e.g. Truvelers, 354 F2d at 490; Feehan 1 Feehnn, 201 1 WL 497852, " 7 , 201 1 US Dist LEXIS 14047, * 19 [SD NY 201 11). Federal case law, however, is not binding on this court. (See Swezey v IJynch, 87 AD3d 119 [l"Dept 201 11, ufld 19 NY3d 543 [2012] Supreme Court which applied fcdcral procedural rule [observing that decision rendered by U.S. not binding on appellate division of state court in interpreting state procedural rule]). In contrast, our state interpleader statute, CPLR 1006(f), not only permits a court to award attorney fecs and costs in an interpleader action., but providcs that the court "shall" impose fees a i d costs "as may bejust." (SPP~g Boris v Nnherty, 242 AD2d 9, 14 [4'h Dept 19981j. Herc, on two prior occasions, justices previously assigned to this case approved the bringing oftliis action in order to: (a) distribute the limited funds available in an equitable manner; and (bj protect against likely bad-faith claims by claimants if Praetorian werc to pay claims o n the first-in-lime, first-in-right basis. (Decision and order, dated June 17, 2010 [mot. seq. numbers 001 and 0021 [Diamond, J.]). Moreover, it is undisputed that the individual defendants suflered significant injuries and 5 [* 7] damages, and that their claims in total will likely exceed the $1 nillion policy limit. Thus, while Praetorian niay not have been forced to interplead here, it acted prudently in doing so as it cannot be disputed that there will be competing claims to the insuraiicc proceeds and that pursuant to the first-in-timc, first-in-right rule, the proceeds may be deplctcd by payment to only m e or two claimants, potentially causing other claimants difficulty in obtaining recovery for their injuries. The responsibility h r these circumstances lies solely with DM1-IZ. Therefore, under the circumstances presented, Practorian ought not be penalized for having taken the more prudent and diligent course rather than waiting for a dispute to arise. (See Rice v C'hana,~, Misc 2d 8 13 [Sup Ct, New York County 20021 [attorney entitled to costs, 191 fees, and expcnscs for bringing interpleader action to resolve competing claims to settlement funds]). [)MI-1.Z aiid the individual defendants observe that awarding fees against the $1 million will deplete the finds available to the individual defendants. Having failed to interpose this argument in the prior motion, defendants are not entitled to its consideration now. In any event, they have not established a basis for departing from the gencral rule that costs and fees for an intcrpleadcr be taken from the insurance fund. (CPLR 1006[f] [costs and fees may be charged against subject matter of interpleader action]; see BNP Paribus v Wo;yzala Opportunities Fund 1 , 1 I I I LP, 2010 WL 1875716 [SD NY 20101; C'mrkey v For.dMo/or C'o, - (JAW, 2002 WL 974827 [SD N Y 20021 [observing that intcrpleader costs and lees are gencrally awarded against intcrpleader ~ I I I I ~ I fiind absciit misconduct by party that suggests that party should bear costs]). Moreover, most of the attorney fccs aiid costs incurred by Practorian result froin its obligation lo litigate the interpleader action and oppose 1)HMZ's opposition as wcll as the instant 6 [* 8] motion to reargue, and it was IIHMZ s failure to procure sufficient insurance to cover the incident at issue that led Praetorian to commcnce the interpleader. Thus, the equities here, il any, weigh in favor of Praetorian and against DMHZ. DMHZ s other arguments wcrc cithcr argued previously or raised for the first time in reply, neither of wliich is permitted on a motion to reargue. ( F d e y , 68 AD2d at 567-5619[purpose of motion to reargue is not for unsucccssful party to argue again issues already decided or to set forth new arguments]). B. Praetorian s cross motion 1. Notice As a condition of the granting of costs, the previously assigned justice directed Praetorian, within 30 days of service of tlie September 6, 201 1 Order with notice of entry, to provide notice of this action to all the tenants ofthe premises who lived there on the day of the incident (September 6, 201 1 Order, at 2). He also ordered that notice be provided in a specific form and given to specific individuals and an entity. (Id.). Praetorian now provides a copy of a notice of entry of the September 6,201 1 Order, which was served on January 9, 2012 (Ford Aff., dated Feb. 13, 2012, exh. A, B), along with copies of notices mailed to the specified individuals and tlie entity on or about December 21, 201 1, and stamped envelopcs, ccrtified mail receipts, and return receipts. (Zd.,exh. C). DMIM and the individual claimants do not challenge Praetorian s service. Having complied with the conditions set forth by the previously assigned justice, Praetorian is now cntitled to consideration of its cross motion. 7 [* 9] 2. Costs and fees Practorian seeks an award of$58,096.39 in costs and fees (Ford Afl:, dated Feb. 13, 2012. 71 9; exh. [I) and, acknowledging that this anioiint is highcr than what was originally anticipated, attributes it to motion practice, numerous discovcry requests, and the necd to retain an iiivcstigator to identify the tenants and occupants who lived at the premises on the day of the incident as well as their last known addresses. I n opposition, DMHZ argucs that the amount sought is unreasonable as numerous billing entries are for tasks that are non-billable or unnecessary, such as research on basic principles of interpleader; nunierous interoffice discussions, memos and correspondence; efforts to obtain joinder of the underlying lawsuits, and preparation of litigation budgets and reports, and work on the discharge motion, which DMHZ claims could have been resolved by stipulation ( Manarel Aff., dated Feb. 23, 2012,111 45-46). It also asserts that the amount of costs and fees should be determined at a hearing. As a hearing may increase Praetorian s attorney fees and further deplete the funds available to the claimants who suffered substantial injuries as a result of the incident, DMHZ is directed, within 30 days of the date of this ordcr, to review Praetorian s billing rccords and providc a list ofitems it Gnds objcctionable and provide Praetorian with the list for its review Praetorian is tlicn directed to review the list and, within 30 days o l their receipt, coinmuiiicate with DMHZ in an effort to resolve the f ees. If tlic parties are unable to agree on an amount of attorney fees to bc awarded to Praetorian, then the issue of Praetorian s costs, disbursements, and rcasonable attorney fees, which Praetorian may deduct from the $1 million, is referred to a Special Referec to hcar and 8 [* 10] determine (see CPI ,R 43 17 Ib 1; see also Vermylen v Genworrh Lit2 Ins C'o. of N Y , 28 Misc 3d 1236[A] [Sup Ct, N Y County 20101). 111. CONCLUSION Accordingly, it is hcrcby ORDERED, that the motion of' interpleader defendant DMIJZ Corporation for leave to reargue is granted; it is further ORDERED, that, upon reargument, the motion is denied; it is further ORDERED, that the cross imotion of interpleader plaintiff Praetorian Insurance Company is granted as fbllows: (1) Praetorian is directed to retain thc sum of $1 million ($1,000,000) to the credit of all actions arising from the February 24, 2009 fjre at 22 James Street, New York, New York, and, upon the retention of said sum, Praetorian is dischargcd from any and all further liability as to the interpleader defendants named in this action and any other potential claimants with respect to the February 24, 2009 fire at 22 James Street, New York, Ncw York; (2) all counterclaims asserted against Practorian are dismissed; and (3) no part of this Order affects Praetorian's obligation to defend DMHZ, as provided under policy No. J i543002984, until such policy's $1 million limit, lcss the above-stated dcduction for costs, disbursements, and attoriicy fees, is exhausted by either scttlcmcnt or judgment; it is further [* 11] ORDERED, that tlic dctermination of the issue of Praetorian s costs, disbursements, and reasonable attomcy fces is held in abeyance pending either receipt of the stipulation by the parties, as stated in the body of. the court s decision, or receipt of the determination ofthe Special Referee or the designated rekree; and it is further ORDEIIHI, that if thc parties fail to stipulate to Praetorian s costs, disbursements, and reasonable attorney fees, then counsel f i r the party seeking the reference or, absent such party, counsel for the plaintiff shall, within 30 days from the date of this order, serve a copy of this order with notice of cntry, together with a completed Information Sheet, upon the Special Referee Clerk in the Motion Support 0fl;ice in Room 1 19 at 60 Centre Street, who is directed to place this matter on the calendar of thc Special Referee s Part (Part 50 R) for the earliest conven i cn t date. ENTER: Copies are available in Rm. I 19 at 60 Centre Street, and oil the Court s wcbsite. 10 -~ . ..... . . . . . . ........... .

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