GuideOne Specialty Mut. Ins. Co. v New York State Ins. Fund
Annotate this CaseDecided on November 12, 2015
Court of Claims
GuideOne Specialty Mutual Insurance Company, as assignee of Star Pak Contracting, Inc., Claimant,
against
New York State Insurance Fund, Defendant.
Claim No. None
For Claimant:
L'Abbate, Balkin, Colavita & Contini, L.L.P.
By: John D. McKenna, Esq.
For Defendant:
Eric T. Schneiderman, Attorney General
By: Anthony Rotondi, AAG
Alan C. Marin, J.
GuideOne Specialty Mutual Insurance Company applies here, under section 10 (6) of the Court of Claims Act, for permission to file a late claim, which it terms a "late notice of intention." The Court will consider such to be a late claim and the appended "proposed notice of intention" to be a proposed claim and so refer to them in the following.
This matter arises from the fatal injury of Segundo Juan Amendano Guartamber, who had been employed by Star Pak Contracting, Inc. on a construction project at Bethany Lutheran Church in Kings County when a trench collapsed. The defendant New York State Insurance Fund opposes GuideOne's motion.
As of the date of the deadly accident on May 4, 2007: 1) Bethany Lutheran had been issued commercial general liability and umbrella polices of insurance from GuideOne; 2) the State Insurance Fund (the "Fund") had issued Star Pak Contracting a workers' compensation and employers' liability policy. GuideOne is Star Pak's assignee for the Fund policy.
On August 8, 2007, the Public Administrator, on behalf of the estate, sued Bethany Lutheran in Supreme Court, Kings County, relying upon sections 200, 240 (1) and 241 (6) of the Labor Law. On October 15 of that year, Bethany Lutheran, for its part, sued Star Pak Contracting. The State Insurance Fund accepted coverage and extended a defense to Star Pak in the third party action against it.
On June 10, 2009, Justice Lawrence Knipel issued a one-page handwritten discovery order that among other things directed Star Pak to appear for a deposition by September 10, 2009 "or be precluded from testifying at trial" (exhibit H of claimant's Affirmation [FN1] ). The Estate thereafter filed a summary judgment motion, including in its argument that Mr. Sajjad did not appear for a deposition.
Exhibit I to claimant's Affirmation is a December 29, 2009 letter from the law firm of McMahon, Martine & Gallagher (by Jeffrey Pepe), which represented Mohammed Asif Sajjad, the principal of Star Pak. The letter explained that Mr. Sajjad did present himself for a deposition on July 14, 2009 and "testified for about an hour. The deposition was not concluded that day because my client had an emergency to attend to." The letter went on to note their efforts: "We previously offered to make Mr. Sajjad available to complete his EBT, but that offer was not accepted by all parties. We re-extend our offer now, noting that this matter will not be marked final for some time."
Claimant's Affirmation indicated that the McMahon firm was retained by the State Insurance Fund to defend Star Pak in the third party action based upon the Labor Law (paragraph 14).[FN2] However, by letter dated February 18, 2010, on State Insurance Fund stationery, the Fund's supervising attorney, Edward D. Siegel, wrote that Mr. Sajjad's failure to make himself available for deposition meant that Star Pak had violated the cooperation requirements of their policy with the Fund (exhibit J of claimant's Affirmation).
On April 15, 2010, in a one-paragraph handwritten Order, Justice David Schmidt dismissed the section 200 and 240 (1) causes of action, but granted summary judgment on section 241 (6) against Bethany Lutheran and granted Bethany Lutheran summary judgment and common law indemnification against Star Pak (exhibit K of claimant's Affirmation).
Then in a second letter from Mr. Siegel to Mr. Sajjad at Star Pak, dated April 30, 2010, the State Insurance Fund disclaimed any obligation to satisfy the judgment for damages against Star Pak, stating in part:
"You failed to cooperate with Star Pak Contracting Corp.'s counsel McMahon, Martine & Gallagher by not making yourself available for an examination before trial on or before [*2]September 30, 2009 and your actions were willful in that regard.
. . .
Your failure to cooperate and appear at an EBT as a witness for Star Pak Contracting Corp. violated the terms of the captioned policy resulting in this unconditional disclaimer and denial of coverage." (exhibit L of claimant's Affirmation).
In January of 2011, GuideOne resolved the underlying action for $ 2,250,000, and its
proposed late claim would seek judgment against the State Insurance Fund for that amount, plus interest, for breach of their workers' compensation and employers' liability policy (paragraph 29 of exhibit A of claimant's Affirmation).
* * *
In deciding a late claim motion under section 10 (6) of the Court of Claims Act (the "Act"), six factors must be considered, although the presence or absence of any one is not decisive:[FN3] whether (1) defendant had notice of the essential facts constituting the claim; (2) defendant had an opportunity to investigate the circumstances underlying the claim; (3) defendant was substantially prejudiced; (4) the delay was excusable; (5) claimant has any other available remedy; and (6) the claim appears to be meritorious.
The defendant Fund's Affirmation in Opposition disputes three of the six factors, asserting that claimant failed to show that the delay was excusable or that it lacks an available remedy, and that the second and third causes of action lack merit.
Defendant does not challenge the first three factors of notice, opportunity to investigate and prejudice. For purposes of section 10 (6), notice does not attach because there was knowledge of the cause of action at the agency level; it attaches when the defender of the lawsuit, the Attorney General was served with notice of the motion (See generally, Conroy v State of New York, 192 Misc 2d 71, 72 [Ct Cl 2002]).[FN4] The affidavit of service by claimant was dated August 17, 2015, and the cause of action arguable arose with the second letter from Siegel of the State Insurance Fund on April 30, 2010.
Over five years is not timely notice, but the factors of notice, opportunity to investigate and prejudice are fairly closely linked and can be considered together.[FN5] This matter is not about a slip and fall on a transitory condition; it is uncontested that the relevant information was [*3]documented and preserved. The Court therefore concludes that defendant has not been prejudiced by the passage of time and has a fair opportunity to investigate the case.
As for excuse, ambiguity or uncertainty as to the proper legal forum is insufficient. The standard instance of a valid excuse involves an individual claimant who is too ill to pursue the action for some period of time (Goldstein v State of New York, 75 AD2d 613 [2d Dept 1980]). On whether claimant had another available remedy - - and there is some overlap with the discussion of merit that follows - - this is claimant's only forum to sue for damages against the State Insurance Fund (D'Angelo v State Ins. Fund, 48 AD3d 400, 402 [2d Dept 2008]). In fact, as we know, there was a determination to that effect by Justice Eileen Rakower in GuideOne Specialty Mutual Insurance Company v New York State Insurance Fund, 2015 WL 1735379 (Sup Ct, NY County, Apr. 15, 2015).
The First Department has stated: "To be meritorious, a claim must not be patently groundless, frivolous or legally defective, and the record as a whole must give reasonable cause to believe that a valid cause of action exists (citation omitted)" (Sands v State of New York, 49 AD3d 444 [2008]).
Claimant's proposed claim in its final paragraph sets out what defendant views as three causes of action (claimant's Affirmation, exhibit A, paragraph 29; defendant's Affirmation in Opposition, paragraphs 8 though 10). The basic or first cause of action, as noted earlier, is for breach of contract in the amount of $2,250,000 with interest.[FN6] Defendant does not dispute that this cause of action has merit, but does so for the other two.
The second cause of action in the proposed late claim requests that "The Court enter judgment against the State Insurance Fund requiring it to specifically perform" its obligations under the policy. The Court of Claims does not have jurisdiction to order specific relief. Defendant infers that GuideOne has presented a third cause of action by maintaining that the Fund has been "unjustly enriched," and that such quasi-contractual language presupposes the lack of an existing contract. The Court agrees that such does not have a foundation given the specifics of this case.
Although the First Department's quoted language from the Sands case set out the test for evaluating one of the six statutory factors, it is well established that it would be futile to grant an application under section 10 (6) if the proposed claim lacks a basis in law (Prusack v State of New York, 117 AD2d 729 [2d Dept 1986]) - - which is the case for the second and third causes of action.
The defendant concedes the meritorious nature of claimant's first cause of action, and in any event, this Court finds that the Sands test for the appearance of merit has been met for the first cause of action.
* * *
In view of the foregoing, and having considered the submissions of the parties,[FN7] IT IS ORDERED that motion No. M-87235 is granted. Within sixty (60) days of the filing of this Decision and Order, claimant shall serve and file a verified claim in compliance with this Decision and Order and with the Court of Claims Act, including the payment of a filing fee in accordance with section 11-a thereof.
New York, New York
November 12, 2015
ALAN C. MARIN
Judge of the Court of Claims Footnotes
Footnote 1:In full, it is the Affirmation of John D. McKenna in Support of GuideOne's Motion for Leave to Serve and File a Late Notice of Intention. Subsequent references to "claimant's Affirmation" will mean the foregoing; there is a responsive filing by claimant with the same title except "further support" is inserted for "support"; no exhibits are attached thereto.
Footnote 2:The Fund in its April 30, 2010 letter to Star Pak and Mr. Sajjad characterized McMahon, Marine & Gallagher as "your counsel" (exhibit L of claimant's Affirmation). Other portions of the letter are excerpted below.
Footnote 3:See Bay Terrace Coop. Section IV v New York State Employees' Retirement Sys. Policemen's & Firemen's Retirement Sys., 55 NY2d 979 (1982); Scarver v State of New York, 233 AD2d 858 (4th Dept 1996).
Footnote 4:There was an earlier claim filed, GuideOne Specialty Mutual Insurance Company and Bethany Lutheran Church v The State Insurance Fund, claim No. 122269. It was filed with the Clerk of the Court on January 18, 2013, and the Court's files include a Verified Answer and an Amended Verified Answer from the State Attorney General filed with the Clerk of the Court on February 27 and March 21, 2013.
Footnote 5:Brewer v State of New York, 176 Misc 2d 337 (Ct Cl 1998).
Footnote 6:This figure is referenced in paragraph 19 of claimant's affirmation and in paragraph 29 of the proposed claim (exhibit A of the affirmation). Paragraph 23 of the proposed claim has the figure of $225,000,000, which is obviously an error.
Footnote 7:The following were reviewed: from movant/claimant - - a Notice of Motion, an Affirmation of John D. McKenna in Support of GuideOne's Motion for Leave to Serve and File a Late Notice of Intention (with exhibits A through P appended and a separate Memorandum of Law in support thereof), an Affirmation of John D. McKenna in Further Support of GuideOne's Motion for Leave to Serve and File a Late Notice of Intention; from defendant - - an Affirmation in Opposition.
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