Dubovoy v Government Empls. Ins. Co.

[*1] Dubovoy v Government Empls. Ins. Co. 2017 NY Slip Op 50843(U) Decided on June 20, 2017 Supreme Court, Kings County Rivera, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 20, 2017
Supreme Court, Kings County

Igor Dubovoy and SOFIYA DUBOVAYA, Plaintiffs,

against

Government Employees Insurance Company, Defendant.



521339/2016



Attorney for Plaintiff

Lester B. Herzog, Esq.

1729 East 15th Street

Brooklyn, NY 11229

(718) 376-7635

Attorney for Defendant

Montfort, Healy, McGuire & Salley LLP

840 Franklin Avenue

Garden City, NY 1130-7677

(516) 747-4082
Francois A. Rivera, J.

Recitation in accordance with CPLR 2219 (a) of the papers considered on the motion of defendant Government Employees Insurance Company (hereinafter Geico), filed on January 6, 2017, under motion sequence number one, for an order: (1) dismissing the second, third and fourth cause of action of the complaint of Igor Dubovoy and Sofiya Dubovaya (hereinafter the plaintiffs) pursuant to CPLR 3211 (a) (1) and (7); and (2) ruling that the maximum amount recoverable by the plaintiff is $100,000.00 pursuant to Insurance Law 3420 (f) (1).

-Notice of Motion

-Affidavit in support by Geico's claims examiner

-Affidavit in support by Geico's counsel

Exhibits A- E

Notice of Cross Motion[FN1]

-Affidavit in support by plaintiffs' counsel

Exhibits A- E

Recitation in accordance with CPLR 2219 (a) of the papers considered on the joint cross motion of the plaintiffs, filed on March 16, 2017, under motion sequence number two, for an order: (1) pursuant to CPLR 8303-a and 22 NYCRR 130-1.1 for an award of costs and sanctions against Geico based on the frivolity of its motion; (2) granting summary judgment on the issue of liability pursuant to CPLR 3212 and 3212 (g); and (3) declaring that the plaintiffs are free of comparative fault.

-Notice of Cross Motion

-Affidavit in support by plaintiffs' counsel

Exhibits A- E

Affidavit in opposition by Geico's counsel

Exhibit F

Reply Affidavit by plaintiffs' counsel

BACKGROUND

On December 1, 2016, plaintiffs commenced the instant action by electronically filing a summons and verified complaint (hereinafter the commencement papers) with the Kings County Clerk's office.

The verified complaint alleges twenty five allegations of fact in support of four causes of action. The first cause of action alleges that Igor Dubovoy is entitled to $100,000.00 under the Supplementary Uninsured and Underinsured Motorist (hereinafter SUM) provisions of his automotive policy with Geico (hereinafter the policy). The second cause of action seeks damages based on Geico's breach of the policy in the handling of Igor Dubovoy's claim for SUM benefits. The third cause of action seeks damages based on Geico's alleged bad faith in the handling of the plaintiffs' claim. The fourth cause of action is for damages based on Sofiya Dubovaya's claim for derivative injury by the loss of the services and consortium of her husband, Igor Dubovoy. Geico has moved to dismiss the complaint rather than answering it.

The verified complaint alleges the following salient facts. On October 14, 2012, Igor Dubovoy was driving his automobile in the vicinity of Neptune Avenue and West 23rd street in Brooklyn, when he was struck in the rear (hereinafter the collision) by an automobile driven by Timothy D. Wright (hereinafter Wright) causing him to sustain serious personal injuries. Sofiya Dubovaya, his wife, suffered a loss of his services, consortium and society due to those injuries.

At the time of the collision, Igor Dubovoy had an automobile insurance policy issued by Geico containing a provision for SUM coverage with a $100,00.00/$300,00.00 policy limit and Wright did not have any automobile liability coverage. Wright's lack of coverage and Igor [*2]Dubovoy's extensive injuries triggered the SUM provisions of Igor Dubovoy's policy with Gecio. The plaintiffs filed a claim and demanded that Geico pay the monetary limits under the SUM provisions of the policy. Geico allegedly acted in bad faith by either neglecting or refusing to do so and causing the plaintiffs to sustain additional consequential damages as a result.

LAW AND APPLICATION

Based on the admissions in Geico's motion papers there is no dispute that at the time of the collision Igor Dubovoy was covered by a Geico automobile liability policy containing an SUM provision. Nor is there any dispute that he made a claim for SUM benefits. The complaint alleges that when Igor Dubovoy's automobile was struck in the rear by Wright's vehicle, an uninsured motorist, the coverage available under the SUM provisions of his policy with Geico was triggered. The complaint also alleges that Igor Dubovay's wife, Sofiya Dubovaya, lost her husband's services and consortium due to his injuries. It further alleges that they demanded payment from Geico under the SUM provisions of the policy which Geico neglected or refused to pay in bad faith. The complaint further alleges that the plaintiffs suffered consequential damages as a result of the bad faith handling of their claim for SUM coverage.

Geico's Motion Pursuant to CPLR 3211 (a) (7)

Geico has moved for dismissal of the second, third and fourth cause of action in the complaint pursuant to CPLR 3211 (a) (7). For this branch of Geico's motion, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (Bibbo v Arvanitakis, 145 AD3d 657, 659 [2nd Dept 2016]). "A court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint" (Gawrych v Astoria Federal Savings and Loan,148 AD3d 681 [2nd Dept 2017] citing Well v Yeshiva Rambam, 300 AD2d 580 [2nd Dept 2002], and upon considering such an affidavit, the facts alleged therein must also be assumed to be true (Gawrych,148 AD3d 681 [2nd Dept 2017], citing Kopelowitz & Co., Inc. v Mann, 83 AD3d 793 at 797 [2nd Dept 2011] ). Nevertheless, "bare legal conclusions and factual claims which are flatly contradicted by the record are not presumed to be true" (Gawrych v Astoria Federal Savings and Loan,148 AD3d 681 [2nd Dept 2017] citing, Gershner v Eljamal, 111 AD3d 664, 665 [2nd Dept 2013]).

Moreover, where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all, and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate (Gawrych v Astoria Federal Savings and Loan,148 AD3d 681 [2nd Dept 2017] citing Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).

The second cause of action is for breach of contract based on Geico's neglect or refusal to pay the plaintiffs' claims. The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach (Investment Retrievers, Inc. v Fox, 53 NYS3d 662 [2nd Dept 2017]). The complaint contains sufficient allegations of fact to support a cause of action for breach of contract by Geico.

The third cause of action is for consequential damages caused by Geico's bad faith in the handling of the plaintiffs' claim for SUM benefits. "Implicit in every contract is a covenant of good faith and fair dealing which encompasses any promise that a reasonable promisee would understand to be included" (25 Bay Terrace Associates, L.P. v Public Service Mut. Ins. Co, 144 AD3d 665, 667 [2nd Dept 2016]). The implied covenant of good faith and fair dealing is a pledge that neither party to the contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruit of the contract, even if the terms of the contract do not explicitly prohibit such conduct (Gutierrez v Government Empls. Ins. Co., 136 AD3d 975, 976 [2nd Dept 2016]). Such a cause of action is not necessarily duplicative of a cause of action alleging breach of contract (25 Bay Terrace Associates, L.P. v Public Service Mut. Ins. Co, 144 AD3d 665, 667 [2nd Dept 2016]). An insurance carrier has a duty to "investigate in good faith and pay covered claims" (Id.). Damages for breach of that duty include both the value of the claim, and consequential damages, which may exceed the limits of the policy, for failure to pay the claim within a reasonable time (Id.). Such consequential damages may include loss of earnings not directly caused by the covered loss, but caused, instead, by the breach of the implied covenant of good faith and fair dealing (Id.).

The plaintiffs' complaint contains sufficient allegations of fact and support enough reasonable inferences to sustain a cause of action for consequential damages caused by Geico's bad faith in the handling of the claim for SUM benefits. Furthermore, the implied covenant of good faith and fair dealing as alleged here is not duplicative of the breach of contract claim.

The fourth cause of action is for damages sustained by Sofiya Dubovaya by the loss of her husband's services and consortium do to his injuries caused by the collision. The plaintiffs are alleging that Sofiya Dubovaya's derivative damage claim is a compensable loss under the SUM provisions of the policy. The complaint alleges sufficient facts to support a claim for breach of contract based on Geico's alleged failure to pay Sofiya Dubovaya's derivative claim under the SUM provisions of the policy.

Geico's motion papers contain an affidavit of its claims examiner, Jonathan Jean-Noel (hereinafter Jean-Noel), an affidavit of its counsel, Jeffrey D. Present (hereinafter Present) and five annexed exhibits labeled A through E. Exhibit A is a copy of the commencement papers. Present has described exhibit B as a copy of the plaintiffs' application for SUM benefits and exhibit C as a copy of the policy. Present has described exhibit D as a copy of the UM regulations promulgated by the New York State Department of Financial Services, Superintendent of Insurance (hereinafter the UM regulations). Exhibit E is described as a copy of a Supreme Court decision issued by the Nassau County Supreme Court.

Geico contends that because the dispute pertains to the alleged failure to properly process plaintiffs' claim for SUM benefits, the UM regulations apply and mandate that they pursue their dispute through the exclusive process of arbitration and not through a court action. CPLR 3211 (a) (5) provides in pertinent part that a party may move for judgment dismissing one or more causes of action asserted against the party on the ground that the cause of action may not be maintained because of arbitration and award. Geico has neither interposed an answer to the complaint nor moved for the affirmative relief of dismissal pursuant to CPLR 3211 (a) (5). Rather, Geico has chosen the procedural vehicle of dismissal pursuant to CPLR 3211 (a) (1) and [*3](7). Geico has not averred nor demonstrated that any fact alleged in the complaint is not a fact at all. Applying the procedure applicable to a motion to dismiss pursuant to CPLR 3211 (a) (7), Geico's motion must be denied because it submitted nothing to show that a material fact as claimed by the plaintiffs to be one was not a fact at all (Gawrych v Astoria Federal Savings and Loan,148 AD3d 681 [2nd Dept 2017] citing Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).

Geico's Motion Pursuant to CPLR 3211 (a) (1)

Geico also seeks, dismissal of the second, third and fourth cause of action pursuant to CPLR 3211 (a) (1). A motion to dismiss based on documentary evidence pursuant to CPLR 3211 (a) (1) may be appropriately granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Rabos v R & R Bagels & Bakery, Inc., 100 AD3d 849 [2nd Dept 2012] citing Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002]). In order to be considered documentary evidence within the meaning of CPLR 3211 (a) (1), the evidence "must be unambiguous and of undisputed authenticity" (Fontanetta v John Doe 1, 73 AD3d 78, 86 [2nd Dept 2010]), that is, it must be "essentially unassailable" (Suchmacher v Manana Grocery, 73 AD3d 1017 [2nd Dept 2010]). Judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper case (see Gawrych v Astoria Fed. Sav. & Loan, 148 AD3d 681, 682 [2nd Dept 2017]).

Neither the affidavits of Geico's claims examiner nor of its counsel qualify as documentary evidence within the intendment of CPLR 3211 (a) (1) (see Summer v Severance, 85 AD3d 1011, 1012 [2nd Dept 2011]). The plaintiffs do not dispute the authenticity of the application for SUM benefits or of the Geico policy. Both exhibits are documentary evidence within the intendment of CPLR 3211 (a) (1). The Court can and does take judicial notice of the commencement papers, the annexed Nassau County Supreme Court decision and the copy of UM regulations promulgated by the Superintendent of Insurance.

After reviewing all of Geico's evidentiary submissions the Court concludes that they either do not constitute documentary evidence within the meaning of CPLR 3211 (a) (1), or they have failed to utterly refute the plaintiffs' allegations or conclusively establish a defense as a matter of law (Sabre Real Estate Group, LLC v. Ghazvini, 140 AD3d 724-725 [2nd Dept 2016]). Therefore, Geico is not entitled to dismissal of the complaint pursuant to CPLR 3211 (a) (1).

Geico's Motion Pursuant to Insurance Law § 3420 (f) (1)

Geico has also moved for an order or ruling that the maximum amount recoverable by the plaintiffs is $100,000.00 pursuant to Insurance Law § 3420 (f) (1). CPLR 3212 provides in pertinent part that any party may move for summary judgment in any action, after issue has been joined. "A motion for summary judgment may not be made before issue is joined and the requirement is strictly adhered to" (Blue Island Development, LLC v Town of Hempstead, 131 AD3d 847, 850 [2nd Dept 2015] citing, City of Rochester v Chiarella, 65 NY2d 92, 101 [1985]). "Joinder of issue requires the service of a complaint by the plaintiff and an answer or counterclaim by the defendant" (Shaibani v Soraya, 71 AD3d 1121, 1121 [2nd Dept 2010]).

CPLR 3211 (c) provides that either party may submit any evidence that could properly be considered on a motion for summary judgment. It further provides that whether or not issue has been joined, the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment. Geico did not state a specific CPLR provision for bringing the motion for an accelerated declaratory judgment. Furthermore, Geico's motion papers does not make it unequivocally clear that it was laying bare its proof and deliberately charting a summary judgment course (see Hutchison v Kings County Hosp. Center, 139 AD3d 673, 675 [2nd Dept 2016]). For the foregoing reasons, the Court is not treating this branch of Geico's motion as one for summary judgment pursuant to CPLR 3211 (c).

The Supreme Court "may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed" (CPLR 3001). However, New York courts do not issue advisory opinions (Enlarged City Sch. Dist. of Middletown v City of Middletown, 96 AD3d 840, 841—42 [2nd Dept 2012]). Thus, a declaratory judgment should only be granted when it will have a direct and immediate effect upon the rights of the parties (Id.).

Inasmuch as Geico has not answered the complaint and its motion is not being converted to one for summary judgment, its request for an accelerated declaration that the maximum amount recoverable by the plaintiffs is $100,000.00 pursuant to Insurance Law § 3420 (f) (1) is denied without prejudice as premature.

Plaintiffs' Cross Motion for Summary Judgment pursuant to CPLR 3212

Plaintiffs have moved for an order granting summary judgment in their favor on the issue of liability pursuant to CPLR 3212. Plaintiffs have also sought an order declaring that they are free of comparative fault.

As previously stated a motion for summary judgment may not be made before issue is joined (CPLR 3212[a]) and the requirement is strictly adhered to (Blue Island Development, LLC v Town of Hempstead, 131 AD3d 847, 850 [2nd Dept 2015] citing, City of Rochester v Chiarella, 65 NY2d 92, 101 [1985]). Here, the plaintiffs have cross moved for summary judgment before Geico has answered their complaint. The Court has not converted Geico's CPLR 3211(a) motion to one for summary judgment and sees no reason why it should treat plaintiffs' motion any differently. Accordingly, inasmuch as Geico has not answered the complaint, plaintiffs' motion for an order in their favor on the issue of liability and an order declaring that they are free of comparative fault is denied without prejudice as premature (Id.)

Plaintiffs' Cross Motion for Summary Judgment pursuant to CPLR 3212 (g) Plaintiffs have also moved for an order granting summary judgment in their favor on the issue of liability pursuant to CPLR 3212 (g). CPLR 3212 (g) operates where a motion for summary judgment has been altogether denied, or granted only in part. It recognizes that notwithstanding the denial or partial grant, one or several facts may nonetheless appear to be conceded or otherwise definitively resolved by the moving and opposing papers. Such facts should not have to be tried. The court should enumerate, in the order disposing of the motion, the facts that have been found to exist and which are therefore usable at the trial without further litigation of them. The party who would be benefitted by the facts as enumerated should request that the order contain the enumeration. (see CPLR 3212; Siegel, 7B McKinney's Practice Commentaries, C3212:35. Salvaging Something from Abortive Summary Judgment) (see Smith v [*4]Smith., 41 Misc 3d 412 [NY Sup Kings County 2013]). Nothing in the plaintiffs' motion papers supports this branch of its motion.

Plaintiffs' Cross Motion for Sanctions and Costs

Plaintiffs seek an order pursuant to CPLR 8303-a and 22 NYCRR 130-1.1 awarding costs and sanctions against Geico based on the frivolity of its instant motion. CPLR 8303-a permits an award of sanctions for the commencement or continued maintenance of a frivolous action to recover damages for personal injury, injury to property or wrongful death, or an action brought by the individual who committed a crime against the victim of the crime. CPLR 8303-a does not apply to the making of a frivolous motion.

Pursuant to the Rules of the Chief Administrator of the Courts Part 130 as set forth in 22 N.Y.C.R.R. 130—1.1, the court may award to any party or attorney in a civil matter costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney fees, resulting from frivolous conduct.

For the purpose of this Part, conduct is frivolous if: (1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false (see 22 N.Y.C.R.R. 130—1.1). If a court awards costs or sanctions, it must be done in a written decision setting forth the offending conduct, why that conduct has been deemed frivolous and why the amount awarded is appropriate. The decision as to whether to award sanctions is within the sound discretion of the court (In the Matter of Rose Glatzer v Jay Glatzer, 73 AD3d 1173, 1175 [2nd Dept 2010]; citing, Wagner v Goldberg, 293 AD2d 527, 528 [2nd Dept 2002]). In order to impose sanctions, the court must find that the offending party's motion asserts material falsehoods or is without legal merit and undertaken primarily to delay or prolong the litigation, or to harass or maliciously injure another (Premier Capital v Damon Realty Corp., 299 AD2d 158 [1st Dept 2002]).

The plaintiff's contend that Geico's motion for dismissal of the second, third and fourth cause of action is frivolous. Geico has contended, among other things, that those causes of action could not be the subject of a lawsuit because the UM regulations apply and mandate that plaintiffs pursue their dispute through the exclusive process of arbitration.

Plaintiffs contend that Present, Geico's counsel in the instant action, was also Geico's appellate counsel in the matter of Santoro v Geico 117 AD3d 1026 [2nd Dept 2014]. Plaintiffs further contend that the some of the arguments that Geico has advanced in the instant motion for dismissal were advanced in the Santoro case and were flatly rejected by the Appellate Division Second Department. Plaintiffs conclude that Geico was either aware or should have been aware of this contrary Appellate Division authority because Present, its current lawyer, was its counsel on that appeal.

Plaintiffs argue that Geico's instant motion is frivolous because it is based on a rejected contention that an insured can not bring a breach of contract claim to court based on an alleged failure by its insurer to pay SUM benefits.

The underlying action in the Santoro case was brought by an insured seeking to recover damages against Geico, its insurer, for breach of contract based on Geico's failure to pay the full SUM benefits available under the insurance contract. The Supreme Court of Nassau County [*5]issued an order entered September 24, 2012 (hereinafter the Nassau Supreme Court order), which, among other things, denied Geico's motion for summary judgment dismissing the third cause of action.

The plaintiff in Santoro allegedly was injured in a motor vehicle accident with another vehicle. The insurer of the owner of the other vehicle tendered the policy limit of $25,000.00 in settlement of the plaintiff's claim. The plaintiff had automobile insurance with Geico which included $300,000.00 in SUM coverage. The plaintiff made a claim for the full policy limit of the SUM coverage, or $275,000.00 after subtracting the amount received in settlement. Geico offered the plaintiff $75,000.00, and refused her demand for payment of the policy limit. The Appellate Division Second Department found that Geico's submissions on its motion failed to establish the absence of triable issues of fact as to whether it breached the insurance contract by refusing payment of the full policy limit.

The plaintiffs rely on the Santoro decision to claim that Geico's instant motion to dismiss plaintiffs breach of contract claim merits sanction for frivolity. Contrary to the plaintiffs contention the Santoro decision does not render the aforementioned branch of Geico's motion frivolous. The instant motion is for a dismissal pre-answer pursuant to CPLR 3211 (a) (7) and the Santoro decision was for summary judgment pursuant to CPLR 3212. A defendant moving for summary judgment must make a prima facie showing of entitlement to judgment in its favor and demonstrate that there are no material issues of fact warranting a trial.

A defendant moving for dismissal pre-answer pursuant to CPLR 3211 (a) (7) need only show that the plaintiffs have not adequately plead a cause of action. If the defendant offers evidentiary submissions, then the defendant must demonstrate conclusively that the plaintiffs do not have a cause of action. The plaintiffs did not annex the underlying motion papers in the Santoro case which yielded the Nassau Supreme Court order. It therefore cannot be said that the same arguments advance in the instant motion were advanced in the Santoro case. The decision by the Appellate Division in the Santoro case denying Geico's motion for summary judgment dismissing the action establishes nothing except that summary judgment was not warranted when the motion was made (Baker v R.T. Vanderbilt Co. Inc., 260 AD2d 750, 751-752 [3rd Dept 1999]).

In sum, plaintiffs have not established that Geico's instant motion was frivolous within the intendment of 22 N.Y.C.R.R. 130—1.1.

CONCLUSION

Government Employees Insurance Company's motion for an order dismissing the second, third and fourth cause of action of the complaint pursuant to CPLR 3211 (a) (7) is denied.

Government Employees Insurance Company's motion for an order dismissing the second, third and fourth cause of action of the complaint pursuant to CPLR 3211 (a) (1) is denied.

Government Employees Insurance Company's motion for an order pursuant to Insurance Law § 3420 (f) (1) declaring that the maximum amount recoverable by the plaintiffs under its SUM policy is $100,000.00 is denied without prejudice as premature.

Igor Dubovoy and Sofiya Dubovaya's motion pursuant to CPLR 8303-a for an order granting an award of costs and sanctions against Geico based on the frivolity of its motion is denied.

Igor Dubovoy and Sofiya Dubovaya's motion pursuant to 22 NYCRR 130-1.1 for an [*6]order granting an award of costs and sanctions against Geico based on the frivolity of its motion is denied.

Igor Dubovoy and Sofiya Dubovaya's motion pursuant to CPLR 3212 and CPLR 3212 (g) for an order granting summary judgment in their favor on the issue of liability is denied.

Igor Dubovoy and Sofiya Dubovaya's motion pursuant to CPLR 3212 and CPLR 3212 (g) for an order declaring that the plaintiffs are free of comparative fault is denied.

Government Employees Insurance Company is directed to answer the complaint within thirty days of its receipt of notice of entry of the instant decision and order.

The foregoing constitutes the decision and order of this Court.

Enter:

J.S.C. Footnotes

Footnote 1:The plaintiffs' cross motion also serves as opposition to Geico's motion.