Pinnacle Prop. Mgt. Corp. v Haylor Freyer & Coon, Inc.

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Pinnacle Prop. Mgt. Corp. v Haylor Freyer & Coon, Inc. 2017 NY Slip Op 33342(U) July 20, 2017 Supreme Court, Onondaga County Docket Number: Index No. 2016EF2833 Judge: Thomas D. Buchanan Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 STATE OF NE W YO RK SUPREME CO UR T INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 CO UN TY OF ON ON DA GA PINNACLE PR OP ER TY MANAGEMENT CO RP.; FRANKLIN PARK AP ARTMENTS CO., LLC; and PARKSIDE APARTM ENTS CO. LLC; Plaintiffs; DECISION AND OR DE R vs. HAYL OR FR EY ER & COON, INC. and STEVEN DeREGIS; Index No. 2016EF2833 Defendants. Buchanan, J.: De fe nd an ts ha ve mo ved pu rs ua nt to CP LR 3211(a)(1) & (7 ) to dis m iss the Co m pla int in this actio n. Plaintiffs co m m en ce d this action in Ju ly of 20 16 by filing a Su m m on s and Complai nt, in which th ey asse rt fo ur ca us es of actio n labeled as 1) Breach of Contract, 2) Neglige nce and Professional Malpractice, 3) Neglige nce and 4) Pr om iss or y Estoppal and Detrime ntal Reliance. Th e ac tion arises from flood da m ag e that occurred in Ju ne of 20 15 at pr operties owned by th e plaintiff entities, a loss against wh ich it alleged that the de fe nd is an t insurance agency and the de fe nd an t ind ivi du al insurance ag en t should have procured insurance coverage. In their motion, De fe nd an ts allege th at there is a co mp let e de fe ns e based on do cu m en ta ry evidence and also that th e Co m pla int fails to state a viable ca us e of action. Plaintiffs op po se th e motion. Af te r reviewing th e initia motion papers, the Co l ur t ga ve notice to the parties th at it would tre at this motion as one fo r su m m ar y jud gm en t and allowed time to su pp lem en t the record . Two core ev en ts un derlie the claims asse rted by Plaintiffs and the de fe ns es asserted by Defendan ts. Th e first is a meet ing th at occurred on or ab ou t No ve m be r 26, 2012, among de fe nd an t DeRegis, Paula Gare ll (the wife of Plaintiffs' principal) and Martha Hess (Plaintiffs' office ma na ge r). Th e se co nd is an em ail fro m DeRegis to Ms . Garell 1 1 of 6 [*FILED: 2] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 concerning the flood co verage which is at the heart of this action. Th e two sides differ as to the content of the No vember 26 meeting an d the authority of those in attendance. They also differ as to whet her the DeRegis email gave notice to Plaintiff s that action was required in order to bin d flood coverage. Ind eed, Plaintiffs deny re ceipt of the email. On a motion to dismiss under CPLR 3211, the pleading at issue is to liberal construction, wi be given a th the allegations it co ntains presumed to be true and the plaintiffs afforded every favorable inference. The functio n of the court conside ring such a motion is to determine whethe r the facts alleged fit wi thin a cognizable legal theory ( Goldman v. Metropolitan Life Ins. Co ., 5 NY3d 561 [2005]). However, allegations th at are "bare legal conclusions" or are "fl atly contradicted by do cumentary evidence" do not receive such favorable consideratio n ( Simkin v. Blank, 19 NY3d 46, 52 [2012]). From the record presented on Defendan ts' motion, including the parties' divergent views of the November 26 meeting and Defend ants' denial of receipt of the November 29 email , it appeared to the Court that information be yond the documentary and testimonial evidenc e initially submitted was necessary in orde r to make a final determ ination of Defendants' motion. The Court having electe d to treat this motion as one for summary judgm parties having made ad ent, and the ditional submissions, the summary judgment sta ndard now applies, so that Defendants be ar the initial burden of making a pr im a facie showing of their entitlement to judgemen t as a matter of law by submitting sufficient ev idence to show that no material issues of fact exist (Winegrad v. Ne w York Univ. Med. Ctr., 64 NY2d 851 [1985]). If they make the requisite showing, the burden of proof then sh ifts to Plaintiffs to show the presence of qu estions of fact requiring trial (Alvarez v. Prospe ct Hosp., 68 NY2d 320 [1986]). The facts must be construed in a light most favorable to Plaintiffs as the nonmoving parties (see e.g . Hanna v. St. Lawren ce County, 34 AD3d 11 46 [3d Dept 2006]). 1. Breach of Co nt ra ct and Professional Ma lpractice. Defendants' first argument is addressed to both th e first and second caus es of action. Defendan ts argue that they fulfilled the duty they owed to Plaintiffs unde r either theory by atte mpting to obtain the coverage requested by Plaintiffs and presentin g coverage options to them. Defendants further argue that they informed Plaintiffs of th e need for authorizatio n to bind coverage, which Plaintiffs failed to give. 2 2 of 6 [*FILED: 3] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 The parties agree that the basic duty of an ins urance agent is to obta in requested coverage within a reas onable time or to inform the client of their inabil ity to do so (Murphy v. Kuhn, 90 NY2d 266 [1997]). The parties further agree that a "s pecial relationship" exception to this rule exists in cases where the plaintiff can show either ( 1) payment of compensation to the ag ent other than insuran ce premiums, (2) inter action between the insured and the agent regarding a question of coverage and reliance by the insured on the expertise of the agent, or (3) a course of deali ng over an extended period of time that would put a reasonable agent on notice that th eir advice was being so ught and specially relied upon (Id. at 27273). Defendants point out th at Plaintiffs were inform ed by their insurer in Oc tober of 2012 that flood insurance co verage for the subject properties would not be included in Plaintiffs' policy upon its next rene wal. Defendants offer the November 29, 2012 email from DeRegis to Garell as setting forth flood insurance covera ge options for the subje ct properties and seeking Plaintiffs' auth orization to bind covera ge. In addition to an affir mation from counsel and an affidavit from Mr . DeRegis stating that the email was sent, De fendants submit an affidavit from a cyber security consultant, wh o states that he exam ined the Lotus Notes mailboxes used by De fendants and found th e November 29 email in the "sent" folder for Mr. DeRegis with an ind icator that it was sent on November 29, 2012 at 3:29 p.ni. DeRegis further states that he discussed Plain tiffs' lack of flood covera ge at annual review meetings with Plaintiffs in 2012 and 2013. Defendants su bmit an affidavit from Account Manager Heat her Parker, who confirm s that such discussion took place at the 2013 meeting, which sh e attended with DeRegis . Defendants also note that an Insurance Proposal submitted to Plaintiffs by DeRegis fo r coverage from Novem ber of 2014 through November of 2015 lis ted flooding as one of the exclusions from co verage. Finally, Defendants argue that even if the "special relat ionship" exception to the common-law duty of insurance agents wa s found here, Plaintiffs were still required to ta ke action and provide authorization to bind co verage, which they failed to do. On this record, Defendants carry their initial burden of pr oof. As noted above, Plain tiffs dispute the conten t of discussions at the November 26, 2012. In meeting of their affidavits, both Ga re ll an d He ss sta te th at th ey lef t th e 3 3 of 6 20 12 [*FILED: 4] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 meeting with DeRegis with the impression tha t flood insurance cove rage had been obtained. Plaintiffs' princ ipal Donald Greenwood states in his affidavits tha t he sought out Defendants specifically to remedy a lack of flo od insurance coverage that had existed previously, that he infor med Defendants of tha t fact, and that he relied upon Defendants' continuing representation s that flood coverage ex isted. Plaintiffs dispute their re ceipt of the DeRegis em ail and the efficacy of tha had it been received. Th t email, e Garell and Hess affida vits both state that they examined their respective computers fo r any sign of the DeRegis email having been rece ived, but found none. The Court notes Defendants' argument that the Complaint its elf contains an allegation that Plaintiff s received "correspon dence" from Defenda nts on or about November 29, 2012. Ho wever, viewed in a light most favorable to Plain tiffs, the record here does not establis h that the corresponde nce referred to in the Complaint was the DeRegis email. Plaintiffs further argue tha t Garell was not authoriz ed to make insurance de on behalf of Plaintiffs, cisions making any notificatio ns that might have be en given to her ineffective as to the pla intiff companies. Plain tiffs submit statements to that effect in affidavits from Garell, He ss and Greenwood. Pl aintiffs also submit an affidavit from Jim Leatzow, who is offere d as an expert in insur ance agent/broker prac tices. Mr. Leatzow opines that it was "una cceptable in the comm ercial insurance industry " for DeRegis to email Garell without so me written authorization or a sufficient pattern of conduct showing her to be an authorized agent of Plaintiffs, and un acceptable to rely on an email to provide notice to Plaintiffs witho ut a follow-up through formal written correspon dence. Leatzow also finds the content of the DeRegis email to be insufficient to serve as notice of a lapse in coverage. While Plain tiffs do not respond direc tly to statements by DeRe gis and Parker that flood coverage wa s discussed again at the annual review meeting with Garell and Hess in 2013, the argume nt that neither Garell no r Hess were authorized to act on behalf of Plaintiffs to bind cove rage also applies here. Plaintiffs' averments als o serve to blunt anoth er of Defendants' argu Defendants point to copie ments. s of Insurance Proposals submitted by Defendants to Plaintiffs prior to renewal of the po licies for each applicable year. Al l of th es e pr op os als co nta in a 4 4 of 6 [*FILED: 5] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 page entitled "Cause of Loss" which states that the proposed coverage is subject to exclusions. The form then states, "Some exclusion examples are as follows". The ensuing list includes "Flood". The proposals for 2012-2013 and 2013-2014, however, also include proposals for flood coverage, albeit not for the specific properties that are the subject of this action. The proposal for 2014-2015 does not include a proposal \tor flood cov erage, although the record includes statements I by both sides that Defendanfs had plac ed flood coverage for some of Plaintiffs' proper ty that year. The various affi dar its sub mitted here also indicate that the proposals were discussed at the annual review meeting s, but they 1 do not appear to be an "offer" of covera I ge or an order form to be sigin ed or initialed by Plaintiffs. The proposals themselves, therefore, do not appear to tell the enti re story. I Viewing the record in a light most favo rable to Plaintiffs, it appears that there are, I at a minimum, questions of fact as to the discussions had at the 2012 meeting , whether I the DeRegis email was received, whether that email functioned as noHce to Plaintif fs that I action was required in order to obtain the coverage requested, and wh~ther the exclusion I language in the Insurance Proposal doc uments gave notice to Plaintiffs that they lacked flood insurance coverage on the subject properties. \ It is worth noting that Defendants submit their own expert affidavi~ in response to the I Leatzow affidavit, in which defense exp ert Burl Daniel offers his own a~alysis of the facts and finds fault with the conclusions rea I ched by Leatzow. The Daniel Affidav it serves to reinforce the presence of factual que stions. The differing expert ipin ion s, like the contradictory affidavits as to the receipt I of the DeRegis email and Garell's auth ority to act for Plaintiffs, set up questions of credibili ty and of fact that are not apprbpriately resolved I on a summary judgment motion (see e.g. Dillenbeck v. Shove/ton, 11 f4 AD3 d 1125 [3d Dept 2014]; Rosenbaum v. Camps Rov I Tov, 285 AD2d 894 [3d Dept 2001]). It is not necessary to reach the question of whe ther a special relationship exi$ted betw een the parties in order to determine that Defend ants' motion must be denied aJ to the first cause of action for breach of contract and the second cause of action fo~\ neg ligence and professional malpractice. I 1 1 2. Negligence. Defendants argue that Plaintiffs' third cause of actibn for neglige nce is cumulative and nonsensical. Def end ants ' initi al memorandum of la'f\' points out that 5 5 of 6 [*FILED: 6] ONONDAGA COUNTY CLERK 08/24/2017 09:33 AM NYSCEF DOC. NO. 68 INDEX NO. 2016EF2833 RECEIVED NYSCEF: 08/24/2017 Defendants are not the issuers of insurance coverage and tha t they c:.lo not adjust claims (the failure to do so being the gravamen of this cause of action ). Hdwever, Defendants off er no factual allegations as to this arg um en t in an y of the aff idavits +b mi lte d in support of their motion. Therefore, De fendants fail to carry their initial burdem of proof as to this cause of action and their motion must be denied accordingly. 3. Promissory Estoppel. Likew ise, Defendants limit their argu ent as to Plaintiffs' fourth cause of action for pro missory estoppel to their init ial me orandum of law. Defendants characterize this cau se of action as a "repackaging" of the ,rst cause of action for breach of contract, which mu st fail for the same reason - Pla intiffs' ailure to authorize Defendants to bind coverage in response to the DeRegis email of Nove ber 29, 2012. For the same reasons discussed abo ve in relation to the breach of con tract laim, Defendants' motion also fails as to this claim. 1 The parties' remaining conten tions have been considered, b t do not alter the outcome of this motion. There fore, in consideration of the for egoing it is hereby ORDERED, that the motion by Defendants to dismiss the I om pla int herein, converted by the Court to a mo tion for summary judgment, is denied. Dated: ~,,)\v\ ru.> ?.. 0 '-"1 ENTER. Thomas D. Buchanan Supreme Court ustice Papers considered: Notice of Motion; Affirmation of Anthony Green, Esq., with exh ibi s; Memorandum of Law; Affidavit of Hon. Donald Greenwood, with exhibit; Affida vit of Paul. Garell; Affidavit of Martha Hess, with exhibits; Memorandum of Law; Affidavit of Stev~n DeRegis, with exhibit; Reply Memorandum of Law; Affidavit of Gary Haas, wit h exhibits; Supplemental Affidavit of Steven DeRegis, wit h exhibits; Corrected Supplem ental A~'davit of Steven DeRegis, with exhibits; Affidavit of Burl Daniel, with exhibits; Aff idavit o Scott Pellman; Supplemental Memorandum of Law; Affidavit of Robert Co nnolly, E q., with exhibit; Supplemental Affidavit of Hon. Donald Greenwood, with exhibit s; Affidavi of Jim Leatzow, with exhibit; Affidavit of Rober t Galusha. 6 6 of 6

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