Opinion
05 Civ. 10261 (PKC).
November 7, 2007
MEMORANDUM AND ORDER
In this diversity action, plaintiff St. Paul Fire Marine Insurance Co. ("St. Paul") seeks payment for automobile insurance premiums it claims to have earned pursuant to two separate insurance policies issued to the defendant, Adee Truck Car Rental, Inc. ("Adee"). The answer in this action interposes a single counterclaim: that St. Paul did not perform its contractual obligations in a reasonable manner which caused Adee to suffer damages. Adee seeks to have any premium it is found to owe St. Paul offset by the amount of its claimed damages.
A generous period for pre-trial discovery in this action has ended. St. Paul now moves for summary judgment in its favor on the affirmative claims against Adee, as well as on Adee's counterclaim against St. Paul. I conclude that no reasonable trier of fact could find in favor of the defendant on the evidence before me. St. Paul's motion for summary judgment is granted in its entirety.
I. Factual Background
In setting forth the facts, I accept non-movant Adee's version of the facts and any facts proffered by St. Paul which Adee does not dispute. I draw all reasonable inferences in favor of Adee. In opposing summary judgment, defendant Adee has submitted no affidavit of its own. Instead, it relies on the transcript of the deposition of the defendant's sole shareholder pursuant to Rule 30(b)(6), Fed.R.Civ.P., together with assorted documents annexed to its Memorandum of Law.
Defendant Adee owns a fleet of automobiles and trucks which it offers for rent on a daily basis from its place of business in the Bronx, New York. In October 2002, Adee found itself without insurance coverage for its rental fleet after its prior policy was cancelled for nonpayment of premium. (Spence Dep. at 23) On October 8, 2002, Adee used its insurance broker, Rosemary Fernandez, to apply for automobile insurance through the New York Automobile Insurance Plan ("NYAIP" or the "Plan"), an assigned-risk pool in which all providers of automobile insurance in the state of New York are required to participate. (Id. at 20) The Plan, established pursuant to Article 53 of the New York Insurance Law, is an unincorporated entity which acts as an automobile insurance procurement mechanism for those who are otherwise unable to obtain automobile insurance in the voluntary market. Automobile insurers participating in the Plan are required to write insurance for eligible risks assigned to them by the Plan and must charge premiums and provide coverage according to Plan rules. NYAIP § 2. The risks in the Plan pool are equitably apportioned among the participating insurance companies and the total amount of assigned risk a carrier must accept from the Plan is determined by the amount of voluntary automobile coverage it writes in New York. Id. Policies issued pursuant to the Plan generally have a coverage period of one year. Id.
"All insurers licensed to write motor vehicle insurance in this state shall subscribe to and participate in the reasonable plan or plans, approved or which may be approved, by the superintendent after consultation with such insurers, for equitable apportionment among such insurers of applicants or such insurance who are in good faith entitled to but are unable to procure it through ordinary methods." N.Y. Insurance Law § 5301 (McKinney 2000).
Unless otherwise indicated, references are to the Rules of the NYAIP in effect as of October 1, 2002.
Those seeking to utilize the Plan to obtain automobile insurance are required to submit a form application, obtainable through a broker or agent that has received prior certification by the Plan to act as a "producer of record" for the Plan. Id. § 15A. At the time the application is submitted, an applicant is required to pay the full estimated premium for the year or a deposit in accordance with the Plan's "Installment Plan" or "Two Payment Plan." Id. § 11(A). The Plan application must be signed by both the applicant and the producer of record. In signing the application, the applicant attests that "all statements contained in [the] application are true and that these statements are offered as an inducement to issue the policy for which the Applicant is applying." (Vossen 6/6/07 Aff't, Exh. D) The broker, upon signing the application, attests that she has "read the New York Automobile Insurance Plan, ha[s] explained the provisions to the applicant, and ha[s] included in th[e] application all required information given to [her] by the applicant." (Id.) Upon receiving the application, the Plan "designates an insurer to which the risk shall be assigned" and sends the selected insurer a copy of the application together with the estimated yearly premium or premium deposit. NYAIP § 12(A). Coverage becomes effective on the risks listed in the application "at the time and date specified in the notice issued by the plan [to the insurer], which date shall be 12:01 A.M. of the day of receipt of the application in the office of the Plan." Id. § 12(A)(1). The "producer of record" may then issue temporary insurance identification cards to the applicant.Id. § 11(F). After initially binding the coverage as of the date of the receipt of the application by the Plan, the insurer conducts an underwriting review to make certain the risks set forth in the application are, in fact, eligible for coverage and that it has all the information necessary to "fix the proper rate" pursuant to the rating schedules found in the Plan. Id. § 14(A). If the applicant has provided sufficient underwriting information on the face of the application then, pursuant to Plan rules, the insurer may issue a formal policy or binder. Id. If the insurer requires further information that is not included in the application, then, rather than issue the policy or binder, the insurer "binds the risk" until it obtains the necessary information. Id. § 14(A)(1). The Plan contemplates that any underwriting or application review by the insurer will take 30 days or less because the Plan states that "[t]he company must mail an appropriate policy within 30 days of the assignment date." Id. § 15(1)(a).
Having received Adee's insurance application, along with a Plan-required premium deposit of $15,000 (25% of the total estimated premium) and a handwritten schedule containing the vehicle identification numbers and license plate numbers of 47 vehicles, the Plan assigned the risk to St. Paul on October 22, 2002. (Vossen 6/6/07 Aff't, Exh. A.) St. Paul bound coverage retroactively to October 10, 2002 as directed by the Plan assignment notice. (Vossen 7/19/07 Aff't, Exh. A.) After receiving the application, St. Paul found that copies of the vehicle registrations were not included with the application. St. Paul asserts that it needed copies of the registrations to insure that the subject vehicles were registered in the name of the entity listed as the applicant on the NYAIP insurance application. To that end, on October 29, 2002, St. Paul sent a letter to Adee's insurance broker requesting, among other information, copies of the vehicle registrations of the subject vehicles. (Vossen 6/6/07 Aff't, Exh. B) Receiving no response, St. Paul again asked for underwriting information, including the vehicle registrations, on November 14, 2002. (Id.) On November 19, 2002, Adee (through its broker) responded to St. Paul by faxing a letter which purported to have attached the requested registrations. (Def. Mem., Exh. B) However, on November 25, 2002, St. Paul again wrote to Adee's broker and noted that in response to its request for the vehicle registrations, St. Paul had received a single page containing copies of only two vehicle registrations. (Vossen 6/6/07 Aff't, Exh. B) St. Paul, through one of its underwriting specialists, noted to Adee's broker that it needed copies of the registrations "for all vehicles" for which Adee had applied for insurance so that it could "see what name the vehicle was registered under" because "[t]he NYS Department of Motor Vehicle Law requires exact matches with the vehicle and who it was registered under." (Id.)
On January 9, 2003, St. Paul sent a notice of cancellation, effective January 30, 2003, to Adee's broker and noted in a cover letter that it was still without the necessary underwriting information it had been requesting since October 2002. (Id., Exh. C) The notice of cancellation listed "failure to respond to requests for underwriting information" as the reason for cancellation and stated that Adee had the "right to request review of this cancellation of coverage pursuant to Section 19 [of the NYAIP]. . . ." (Id.) Adee sought no such review nor did it make any further premium payments beyond the initial $15,000 deposit that it included with the NYAIP application. Adee did, however, apply again for automobile insurance through the Plan.
In February 2003, Adee submitted a second application with another $15,000 premium deposit to the NYAIP and, again, St. Paul was assigned by the Plan to be Adee's automobile insurance carrier. Adee's sole shareholder, Constantine Spence, also owned two other companies, "Sam Green Realty" and "TNR Enterprises, Inc." and several of the vehicles in Adee's rental fleet were registered to those entities. On February 19, 2003, St. Paul wrote to Adee's broker stating that it had found that several of the vehicles for which Adee sought insurance were registered under names other than Adee and noted "[t]hese vehicles are not eligible for coverage under this policy. YOU MUST RESUBMIT THESE THROUGH THE NEW YORK PLAN." (Id., Exh. E) (capitalization in original) The St. Paul letter purports to have attached a list of vehicles "that are not covered as well as the vehicles that we need registrations on." (Id.) Adee did not resubmit new applications in the name of Sam Green Realty or TNR Enterprises, Inc., but it did respond, at least partially, to St. Paul's request for registration information. Only 13 vehicles in Adee's fleet were initially accepted for coverage by St. Paul under the 2003 Policy. (Def. 56.1(a)(2), ¶ 17-18; Vossen 7/19/07 Aff't ¶ 6) Seven additional vehicles were subsequently added to the 2003 Policy by endorsement, each of which was registered or re-registered in the name, Adee. (Id., ¶ 20; Vossen 7/19/07 Aff't, Exh. C) St. Paul declined to add any of the vehicles registered under "TNR Industries" or "Sam Green Realty" because it contended that Plan rules only allowed coverage for vehicles registered in the name of the Plan applicant. (Vossen 7/19/07 Aff't, Exh. C) When Adee sought to add a vehicle not registered to it, St. Paul notified Adee, by letter to Adee's broker that St. Paul would not be covering vehicles not registered to Adee. (Id.)
In June of 2003, St. Paul sent Adee's broker an invoice for the premium owed on the 2003 Policy. (Vossen 6/6/07 Aff't, Exh. G) The invoice called for the remittance of $108,548 from Adee, which was the difference between the calculated premium for the entire year per the Plan ratings schedules ($123,532) and the $15,000 deposit Adee had paid when it submitted its application. (Id.) St. Paul claims it sent the formal 2003 Policy to Adee's broker on June 23, 2003. (Vossen 7/19/07 Aff't, Exh. D) Adee, however, claims neither it nor its broker received a copy of the 2003 Policy until, at the earliest, September 2003. (Def. 56.1(a)(2), ¶ 13) Adee made no payments on the invoice and St. Paul sent Adee a "Notice of Cancellation For Non-Payment," dated August 18, 2003. (Vossen 6/6/07 Aff't, Exh. J) The cancellation notice states, "Your premium payment is now past due. Your policy is cancelled as of 09-07-03 for nonpayment of premium. If we receive your premium payment by 09-07-03 we will rescind this notice of cancellation." (Id.). Adee made no payment and the cancellation was not rescinded. Notably, the cancellation notice did not contain a statement referring to the insured's right to a review of the cancellation by the Plan's governing committee as is required by Section 19 of the Plan. Adee did not seek review of the cancellation as was its right under § 19 of the Plan.
Because Adee had responded to St. Paul's underwriting requests for vehicle registrations in connection with 2003 Policy, St. Paul was able to determine that 11 vehicles were eligible (by virtue of their being registered to Adee) to have been covered under the original 2002 Policy. (Vossen 6/6/07 Aff't, ¶ 18) St. Paul calculated the premium pursuant to Plan rules for those 11 cars to be insured from October 10, 2002 to January 30, 2003 (the effective cancellation date of the 2002 policy). (Def. 56.1(a)(2), ¶ 4) St. Paul then sent Adee the cancelled 2002 Policy and an invoice for $50,254, the difference between the calculated amount of premium for the abbreviated policy period ($65,207) and the $15,000 deposit Adee included with its application. (Id., ¶ 10; Vossen 6/6/07 Aff't, ¶ 19) Adee never paid St. Paul any money for the premium related to the 2002 Policy beyond the initial $15,000 deposit it had included with its October 2002 Plan application. (Def. 56(a)(2), ¶ 11) According to Adee, neither it nor its broker received a copy of the formal 2002 Policy until the 2003 Policy was canceled by St. Paul in September 2003. (Id., ¶ 2) St. Paul does not dispute Adee's contention regarding delivery of the 2002 Policy and Adee does not challenge St. Paul's premium calculation. (Id., ¶ 23)
On November 3, 2002, one of Adee's rental vehicles, a 1993 GMC van with Vehicle Identification Number 2GDHG31K6P4514993, was in an accident involving a pedestrian. (Def. Mem., Exh. E; Spence Dep. at 86-87) At some point thereafter, Adee was notified by St. Paul that the van had been in an accident and a claim had been submitted, but that the vehicle was not insured under any policies it had issued to Adee. (Id. at 91) Indeed, the vehicle did not appear on the schedule of 47 vehicles to be insured that was attached to the October 2002 NYAIP application. (Vossen 6/6/07 Aff't, Exh. A; Spence Dep. at 87) In January 2003, some three months after the accident, Adee's broker sent an endorsement request to St. Paul seeking to have the 1993 GMC van and three other vehicles added to the 2002 Policy with coverage retroactively effective as of October 22, 2002. (Spence Dep. at 88-93). Aware the vehicle had been in an accident and was the subject of a claim, St. Paul declined to retroactively add the GMC van to the Policy. Liberty Mutual, the insurer of the injured pedestrian, paid its insured $6,603.05 for medical bills pursuant to her No Fault coverage and then sued Adee in February 2004 as subrogee. (Def. Mem., Exh. E) Adee tendered the summons and complaint to St. Paul and St. Paul declined coverage. (Spence Dep. at 100) Adee never retained counsel or appeared in the lawsuit and, after a judicial inquest, a default judgment against Adee was entered in New York Supreme Court, Bronx County for $14,235.23. (Id.; Spence Dep. at 97)
II. The Claims
St. Paul commenced this action against Adee on November 22, 2005 by filing a summons and complaint seeking a total of $128,050 in earned, unpaid premium on the two cancelled automobile insurance policies — $50,254 for the unpaid premium on the 2002 Policy and $77,796 for the unpaid premium on the 2003 Policy. Adee filed an answer with a counterclaim on or about February 7, 2006, claiming that St. Paul breached the underlying contracts of insurance by not performing its contractual obligations in a reasonable manner. St. Paul moved for summary judgment and Adee opposed the motion, asserting that there is evidence of St. Paul's unreasonable performance sufficient to create a disputed issue of fact as to St. Paul's breach of the insurance contract and thus defeat a motion for summary judgment in St. Paul's favor.
Specifically, Adee claims that St. Paul failed to timely tender both policies with a schedule of insured vehicles causing Adee to unknowingly lease uninsured vehicles. St. Paul's failure, Adee claims, resulted in Adee's incurring costs related to: 1) recovering impounded vehicles; 2) compensating unhappy customers in order to rehabilitate Adee's goodwill after rented vehicles were impounded by authorities for lacking the requisite proof of liability insurance; and 3) incurring liability for a default judgment entered against Adee relating to the previously-discussed November 3, 2002 accident. Adee also claims that, as a result of St. Paul's failure to supply insurance coverage identification cards, it was forced to take certain fleet vehicles out of its rental pool and could no longer rent them to customers. In addition, Adee claims it was not informed that its fleet vehicles had to be registered under the name of the NYAIP applicant in order to be covered under the Plan and that it incurred expenses by having to re-register vehicles in Adee's name to lift registration suspensions imposed by the New York Department of Motor Vehicles ("DMV"). Finally, Adee claims St. Paul unreasonably failed to add vehicles to the policy after being requested to do so by Adee's broker and failed to notify the DMV that it had become the insurer of the vehicles in Adee's fleet. Adee states, through its owner, that it is because of St. Paul's alleged unreasonable contractual performance that Adee failed to pay any premiums beyond the two $15,000 deposits.
St. Paul responds to Adee's counterclaim by arguing that Adee is unable to point to a specific policy provision that was breached and that Adee has no evidence that any of its alleged damages are attributable to St. Paul's actions or omissions. St. Paul has come forward with evidence that it did notify the DMV that Adee had insurance on the vehicles it insured under the Policy and that it did add vehicles to the Policy as requested by Adee to the extent the additional vehicles were registered in Adee's name.
III. Summary Judgment Standard
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. It is the initial burden of a movant on a summary judgment motion to come forward with evidence on each material element of his claim or defense, demonstrating that he or she is entitled to relief. A fact is material if it "might affect the outcome of the suit under the governing law. . . ."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The evidence on each material element must be sufficient to entitle the movant to relief in its favor as a matter of law. Vermont Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004) (citations omitted).
When the moving party has met this initial burden and has asserted facts to demonstrate that the non-moving party's claim cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on "mere allegations or denials" of the facts asserted by the movant. Rule 56(e), Fed.R.Civ.P. In raising a triable issue of fact, the non-movant carries only "a limited burden of production," but nevertheless "must `demonstrate more than some metaphysical doubt as to the material facts,' and come forward with `specific facts showing that there is a genuine issue for trial.'" Powell v. Nat'l Bd. of Med. Exam'rs, 364 F.3d 79, 84 (2d Cir. 2004).
An issue of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Anderson, 477 U.S. at 248. The Court must "view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor, and may grant summary judgment only when no reasonable trier of fact could find in favor of the nonmoving party." Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (quotations and citations omitted); accordMatsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). In reviewing a motion for summary judgment, the court must scrutinize the record, and grant or deny summary judgment as the record warrants. Rule 56(c). In the absence of any disputed material fact, summary judgment is appropriate. Id.
IV. Substantive Law
In order for an insurer to recover unpaid premiums, at minimum, there must be a valid contract of insurance which has attached to the insured risk. See 14 Williston on Contracts § 42:21 (4th ed. 2000) ("If . . . the risk is assumed, the entire premium is earned. . . . Thus, if . . . the insurer never assumed any risk of loss, [then it] never earned any part of the premium."); see also Priddy v. Baum, 79 Misc. 607, 608 (N.Y.Sup. App. Term, 1st Dep't 1913) (recognizing premium paid and risk assumed are the inseparable and indispensable elements of a valid insurance contract). Binders are enforceable contracts of insurance and may be formed or issued prior to the formal issuance of a policy: "[E]nforceable, interim insurance contracts or binders are a product of necessity: They serve as a `quick and informal device to record the giving of protection pending the execution and delivery of a more conventionally detailed policy of insurance.'"SR Intern. Business Ins. Co., Ltd. v. World Trade Center Properties, 467 F.3d 107 (2d Cir. 2006) (quoting Employers Commercial Union Ins. Co. v. Firemen's Fund Ins. Co., 45 N.Y.2d 608, 613 (1978)). Therefore, a formal policy need not be delivered to the insured in order for a contract of insurance to be valid and enforceable. See Searle v. Southern Surety Co. of New York, 139 Misc. 175 (N.Y.Sup.Ct. 1930); Giles v. Comm. Cas. Ins. Co., 251 A.D. 919 (3d Dep't 1937) ("even though a written policy of insurance was not prepared until June 5, an accident which occurred on June 4 was covered.") aff'd, 278 N.Y. 480 (1938). Therefore, the relevant inquiry as to whether an automobile liability insurer has earned premium is not whether the insured has received the physical policy, but whether the insurer has been bound to the risk in exchange for an insured's premium payment (or its promise to pay premium). See Seaver v. Mass. Bonding Ins. Co. of Boston, 7 A.D.2d 310 (4th Dep't 1959) ("the date of issuance is immaterial, inasmuch as it is the effective date of the policy coverage that is determinative and controlling.") aff'd, 7 N.Y.2d 950 (1960); see also 15 Williston on Contracts § 49.72 (4th ed. 2000) ("When the risk attaches, the insurer is liable for any loss occurring before the policy is canceled."); 5 Lee R. Russ Thomas F. Segalla, 74.1 Couch on Insurance (3d ed 2004) ("where an application is made for insurance it is not necessary that there be an express agreement to pay premiums, as such an agreement will be implied. The liability of the insured for the payment of the premium becomes determined as of the date when the risk attaches even though there is no express agreement to pay.").
New York case law recognizes that in at least one circumstance an insured will be relieved of the obligation to pay the insurer the full amount of the agreed-upon premium even though the insurer is bound to the risk by virtue of a valid contract of insurance. This circumstance arises in the context of workers' compensation insurance wherein the amount of premium owed to the insurance company by the insured is determined retrospectively at the end of the policy term through an audit of the insured's payroll records and workers' compensation claim history. See Commissioners of the State Insurance Fund v. Photocircuits Corp., 20 A.D.3d 173 (1st Dep't 2005) and Transportation Insurance Company v. Star Industries, Inc. 2005 WL 1801671 (July 28, 2005 E.D.N.Y.). In Photocircuits and Star Industries, which Adee relies on, the worker's compensation insurers were held to have breached their obligations under the insurance policies with respect to claims handling. The insureds in both cases asserted that the insurers' mismanagement of claims led to excess losses which resulted in inflated premiums after their workers' compensation loss histories were audited.
In Photocircuits, the workers' compensation insurer had paid benefits to a known imposter; failed to limit or cap liability to claimants based on preexisting injuries; and frequently failed to appear at hearings. 20 A.D.3d at 178-79. In reversing summary judgment for the insurer on its claim for unpaid premium, the court noted that the issue was "whether the [insurer] fulfilled [its duty to defend its insured and] pay only those claims for injuries caused or aggravated by the condition of the claimant's employment." Id. at 181. In determining that there was a question of fact as to whether the insurer met its obligation to perform its duties under the policy in a reasonable manner, the court observed that "the facts here are extreme, and our ruling . . . should not be considered as relaxing the rule" that New York does not recognize a claim against a worker's compensation insurer for the breach of the implied obligation of good faith and fair dealing in handling claims. Id. at 183.
Similarly, in Transportation Ins. Co., the insured argued,inter alia, that the retrospective premium on its worker's compensation policy had been unfairly inflated because of the insurer's mismanagement of claims. 2005 WL 1801671, at *6. The insured claimed that the insurer "failed to re-open closed cases bearing on apportionment and/or Workers' Compensation Law . . . and . . . frequently delayed the processing of claims resulting in significantly increased [premium] payments." Id. The court noted that although "there is no cause of action or defense of the implied duty of good faith when the insured alleges that an inadequate investigation resulted in additional retrospective premiums," the insured's allegation was that the insurer "breached its express obligations under the policies and not any `implied' duties." Id.
The present case, however, inhabits the realm of mandated automobile liability insurance, not workers' compensation insurance. The insurance at issue here was procured through the New York Automobile Insurance Plan and therefore contractual common law of insurance contracts has been supplanted by legislation. See Aetna Cas. Sur. Co., v. O'Connor, 8 N.Y.2d 359 (1960). In Aetna, the New York Court of Appeals held that an insurer's common law right to rescind an insurance policy for fraud or misrepresentation had been abrogated by the "comprehensive scheme of regulation of the contractual relationship" found in the New York Automobile Insurance Plan.Id. at 363. The court observed that the Plan set forth procedures that an insurer must follow in order to cancel a policy, but was silent with respect to rescinding a policy ab initio. Id. The court held that if the Plan omits a remedy that contractual common law otherwise permits, that omission means that the remedy is not available. Id. The court reasoned that the "detailed and comprehensive set of regulations governing the rights and liabilities of the parties entering into assigned risk insurance contracts" would have provided for the remedy of recision had that remedy been intended. Id. The court further observed that the "compulsory character of the carrier's participation in the Plan and the very need for the legislation suggest a concern for the entire range of duties and obligations which comprise the assigned risk insurance contract instead of a concentration on isolated aspects of the contractual relationship." Id. at 362-63 (emphasis added). Thus, the Plan defines the contractual rights and duties of the participating parties.
Since the Plan defines the contractual rights and duties of the parties to this lawsuit, I will review the rules of the Plan that are most relevant to the present motion. First, the Plan defines St. Paul's right to be paid premium and Adee's right to specific forms of coverage for Plan-covered vehicles it owns. See generally NYAIP § 10-11. Second, the form application for the Plan requires the broker or "producer of record" to attest that she has "read the New York Automobile Insurance Plan [and] ha[s] explained the provisions to the applicant." (Vossen 6/6/07 Aff't, Exh. D) Third, the Plan requires insurers to conduct an underwriting review of their assigned risk. See NYAIP §§ 15(16)(c); 15(A); 18(2)(9) and 18(2)(10) (provisions presume insurer undertakes an underwriting review of risks assigned by Plan); see also, Panepinto v. Allstate Ins. Co., 108 Misc. 2d 1079, 1082 (Sup.Ct., Monroe County 1981) (The NYAIP "imposes upon the insurer the obligation to promptly investigate the risk.") (citing Aetna Cas. Sur. Co., 8 N.Y.2d at 364). Fourth, the Plan states that "[t]he Plan assignment notice constitutes a binder of the proper coverage applied for in the application. The company must mail an appropriate policy within 30 days of the assignment date." NYAIP § 15(1)(a). Fifth, the Plan requires an insurer to "issue a policy or binder" only "if all information necessary for the insurer to fix the proper rate is contained in the application form." NYAIP § 14(A)(1). If all the necessary information to fix the rate is not contained in the NYAIP application, then the insurer must "bind the risk" without issuing a policy. NYAIP § 14(A)(2). Sixth, except for "replacement vehicles," the Plan requires vehicles not previously insured by the Plan to be (or become within 30 days) registered in the name of the applicant in the State of New York. See NYAIP § 11(F)(1-5) (defining the three types of eligible vehicles that may be covered in "on a [s]pecified [c]ar [b]asis": 1) original vehicles; 2) additional vehicles; and 3) replacement vehicles). Seventh, the Plan allows only the "producer of record" to issue temporary insurance identification cards to applicants. NYAIP § 11(F) ("A barcoded temporary identification card issued in accordance with this subsection may be issued only by the agent or broker designated as the producer of record in the application. . . ."). Eighth, the Plan provides that "an applicant denied insurance, or an insured given notice of cancellation of insurance . . . may request that such action be reviewed by the Governing Committee. . . ." NYAIP § 19.
V. Facts Applied to Plan Rules Law
a. 2002 Policy
It is undisputed that St. Paul bound coverage on the 2002 Policy after receiving the application in October 2002. (Def. Mem. at 6) ("Sometime after the application was submitted, coverage was bound."). Plan rules require that coverage be bound "at the time and date specified in the notice issued by the Plan. . . ." and, indeed, the effective date on the notice transmitted to St. Paul by the Plan was October 10, 2002. NYAIP § 12(A)(1). According to Plan rules, at the time St. Paul bound coverage, it was entitled to either the entire estimated premium for one year of coverage or a portion thereof in accordance with the Plan's premium installment plan. NYAIP § 11(1) ("A risk applying for coverage in the Plan must submit the prescribed application form . . . accompanied by the full annual premium or the appropriate deposit premium as specified in the payment plans by type of risk."). Adee chose to take advantage of the installment plan and submitted 25% ($15,000) of the estimated premium ($60,000). NYAIP § 11(4)(b). Although Plan rules dictate that the remainder of the premium shall be paid in five monthly installments beginning two months after the effective date of the coverage, id., Adee never made further premium payments on the 2002 Policy beyond the initial $15,000 deposit. (Def. 56.1(a)(2), ¶ 11) Adee also failed to provide all the necessary underwriting information twice requested by St. Paul in writing. Adee concedes that the requested underwriting information was not timely submitted to St. Paul: "Adee acknowledges that its Broker's response to St. Paul's request for underwriting information was not provided on a timely basis and this caused the original 2002 policy to be cancelled." (Def. Mem. at 8). At the time Adee submitted its initial Plan application for the 2002 Policy, there was no formal Plan rule requiring Adee to submit, along with the Plan application, photocopies of the registrations of the subject vehicles. See NYAIP § 15A. Requesting registrations to verify an applicant's ownership of subject vehicles was left to the insurer to address as part of its underwriting review. In December 2002, however, the Plan was amended to add such a requirement. Id. § 15(A)(1)(h) (March 2003 Distribution) (Effective December 2002). However, the fact that that application rule was not in effect when Adee submitted its application has no bearing on Adee's obligation to supply underwriting information once requested by St. Paul. As discussed below, St. Paul was clearly within its right to cancel the coverage when the underwriting information was not forthcoming from Adee.
Although Adee failed to supply St. Paul with the requested underwriting information and to make premium payments beyond its initial deposits, St. Paul did not fail to provide Adee with insurance coverage for which it earned premiums. St. Paul provided coverage from October 10, 2002 through January 30, 2003 when the 2002 Policy was cancelled. After Adee failed to respond to two written requests for underwriting information, St. Paul canceled the 2002 Policy in accordance with § 18 of the Plan. Section 18 states in relevant part: "An insurer which has issued a policy or binder under this Plan shall have the right to cancel the entire insurance policy . . . if the insured . . . (b) fails to respond to at least two written requests for pertinent underwriting information, which would have a direct bearing on the rating of a policy. For purposes of this provision, a second written request for pertinent underwriting information shall be mailed no earlier than 10 days after the mailing of the first request. . . ." NYAIP § 18(2)(9)(a-b). St. Paul's second notice of deficiency in supplying underwriting information was sent on November 14, 2002, 16 days after the October 29, 2002 mailing of the first notice. (Vossen 6/6/07 Aff't, Exh. B) The notice of cancellation was sent on January 9, 2003, almost two months after the second request for information was mailed. See NYAIP § 18(2)(9)(b) ("a Notice of Cancellation shall be mailed no earlier than 10 days after the mailing of a second request"). As of the time the 2002 Policy was canceled, however, St. Paul could not determine which of the 47 vehicles were eligible for coverage because of Adee's failure to provide the necessary underwriting information. (Def. Mem., Exh. B) If Adee questioned the propriety of the cancellation or viewed the cancellation as a breach of the insurance agreement, its sole remedy was to seek review of the cancellation pursuant to Section 19 of the Plan. Nowhere in the Plan is an insured given the right to withhold premium if it unilaterally concludes that the insurer is not reasonably performing its contractual duties. If the Plan omits a remedy, then it is unavailable. Aetna Cas. Sur. Co., 8 N.Y.2d at 363.
As previously mentioned, St. Paul was able to determine that only 11 of the 47 vehicles Adee sought to insure in its October 2002 application were eligible for Plan coverage by virtue of their being registered under Adee's name. (Vossen 7/19/07 Aff't ¶ 5) St. Paul therefore calculated its earned premium on the 2002 Policy only for the 11 vehicles that were later deemed to be properly insurable under the Plan. (Vossen 6/6/07 Aff't ¶¶ 19-20; Vossen 7/19/07 Aff't ¶ 5) Rule 3 of the Plan Rating Manual states: "If a policy or form of coverage is canceled by the insurer within the provisions permitted in Section 18 (paragraphs 2 and 3) of the Plan, the return premium shall be computed pro rata." NYAIP Rating Manual Rule 3(B) (October 1, 2002 Distribution). St. Paul's method of calculation for earned premium on the 2002 Policy comports with that rule.
Adee claims that St. Paul's failure to immediately issue the 2002 Policy constitutes unreasonable contractual performance. But it fails to recognize that St. Paul was not in a position to issue the 2002 Policy while the underwriting information was still outstanding. Thus, Adee's own actions prevented St. Paul from complying with section 15(a)'s requirement that "[t]he Company must mail an appropriate policy within 30 days of the assignment date." See also NYAIP § 14(A)(1-2) (requiring insurer to "bind the risk" without issuing a policy "if all information necessary for the insurer to fix the proper rate is not contained in the application form"). Similarly, St. Paul was not in position to issue permanent insurance identification cards until it determined the risks submitted by Adee were eligible pursuant to the Plan. Id. § 12(A). Section 12(A) of the Plan states, "If a risk is eligible for coverage under the Plan and requires an identification card and a temporary card has not been issued by the producer of record in accordance with the provision of Section 11.F., the insurer shall issue a permanent identification card." Id. (emphasis added). Nor was St. Paul permitted by the Plan to issue temporary identification cards as that is the province of the broker alone. Id. § 11(F).
Adee offers the similar argument that St. Paul's failure to contact the DMV to inform them that Adee's fleet was covered by St. Paul amounted to unreasonable contractual performance. Adee contends that St. Paul's failure to do so resulted in multiple vehicle registration suspensions. This argument also fails. St. Paul could not inform the DMV that there was coverage until its underwriting investigation revealed that the vehicles were eligible under the Plan by virtue of their having been registered to Adee. Equally unsuccessful is Adee's argument that St. Paul failed to inform it that to be eligible for coverage under the Plan, the subject vehicles must be registered in the name of the Plan applicant. Nothing in the Plan requires the participating insurer to disclose to the Plan applicant the Plan rules of eligibility. In fact, as evidenced by the NYAIP application form, it is the producer of record that is required to explain the provisions of the Plan to the applicant. (See Vossen 6/6/07 Aff't, Exh. D) Plan requirements notwithstanding, the documentary evidence submitted by the parties shows that St. Paul did, in fact, inform Adee that the vehicles had to be registered to the Plan applicant. (Id., Exh. B)
b. 2003 Policy
As of the date the 2003 Policy was cancelled for nonpayment of premium, a total of 20 vehicles were insured under that Policy. The total amount of premium for the one-year coverage term of February 7, 2003 through February 7, 2004 would have been $165,978. In accordance with Rule 3, however, a pro rata credit was issued to Adee for the period of non-coverage between the date of cancellation (September 7, 2003) and the date the coverage term was to end.See NYAIP Rating Manual Rule 3(B). Thus, St. Paul contends that the total amount of earned premium Adee owes on the 2003 Policy is $77,796 ($92,796 minus the $15,000 deposit Adee submitted with its 2003 application).
Adee makes the same arguments with respect to the 2003 Policy and for the same reasons each of its arguments fails. When Adee submitted its 2003 application, the rule requiring an applicant to include photocopies of vehicle registrations was in effect. Yet, Adee and its broker failed to include copies of the vehicle registrations resulting in St. Paul again requesting the vehicle registration information which, St. Paul contends, Adee largely failed to supply. (Vossen 7/19/07 Aff't ¶ 6) As previously discussed, St. Paul was initially able to verify that Adee was the registered owner of 13 of the 47 vehicles and seven additional vehicles were added by endorsement as registrations for these additional vehicles showing Adee as owner were eventually provided to St. Paul. (Id.) As of October 2003, Adee was still seeking to comply with the registration requirement so that fleet vehicles not yet on the Policy could be covered. St. Paul and Adee's broker were still corresponding regarding the registrations of the subject vehicles. (Id., Exh. C) It is therefore immaterial if the 2003 Policy was mailed to Adee in June of 2003, as St. Paul contends, or in September 2003, as Adee contends because Adee was still submitting underwriting information beyond both of the dates of alleged policy delivery.
Adee's allegations that St. Paul unreasonably failed to contact the DMV and failed to add vehicles to the Policy as requested is insufficient to defeat summary judgment. St. Paul has come forward with the actual correspondence between Adee's broker and St. Paul which shows that the requests to add vehicles to the Policy were either granted by St. Paul and the vehicles were added or denied by St. Paul because the vehicles were not registered in Adee's name. Computer printouts from the DMV database show that St. Paul did, in fact, notify DMV of its status as insurer of at least 13 of Adee's vehicles. (Vossen 7/19/07 Aff't, Exh. C) There was no breach by St. Paul.
I note that, unlike the cancellation for the 2002 Policy, the notice for the 2003 Policy does not contain language referring to the insured's right to a review of the cancellation of the policy by the Plan's board of governors. (Vossen 6/6/07 Aff't, Exh. F (last page of exhibit) and Exh. J)) Under the Plan, cancellations for nonpayment of premium are required to contain such notice and, under New York law, a cancellation notice sent by a Plan participant lacking such notice is ineffective. See e.g., Daniel v. Rivera, 93 A.D.2d 877 (2d Dep't 1983) aff'd 60 N.Y.2d 662 (1983). Adee, however, does not challenge the effective date of cancellation nor does it claim St. Paul's violation of the Plan's cancellation notice requirement caused any of its alleged damages. St. Paul's failure to comply with the Plan rule in this respect gives rise to no remedy in this action. Of course, Adee remains free to pursue any available administrative remedy.
c. The November 3, 2002 Accident
No documentary evidence was submitted by either party with respect to the alleged denial of coverage for the 1993 GMC van that was in an accident with a pedestrian and was and the subject of a default judgment entered against Adee. Adee seeks damages for St. Paul's failure to cover the van and its memorandum of law in opposition to summary judgment attempts to create a disputed issue of fact by stating that "Adee claimed [the van] was on the original roster of vehicles submitted with the application. St. Paul contends it was not." (Def. Mem. at 10)
The "roster" referred to by Adee in its opposition papers is the three-page, handwritten schedule of 47 vehicles that Adee submitted with its 2002 Plan application. (Vossen 6/6/07 Aff't Exh. A) It is entitled, "All Vehicles That Should Be on Policy As of [illegible] 2002," and is date stamped October 25, 2002. (Id.) The vehicles listed on the schedule are consecutively numbered 1-47 with each numeral in that range appearing on the pages of the schedule: Vehicles 1 — 19 are listed on the first page, vehicles 20 — 35 are listed on the second page and vehicles 36 — 47 are listed on the third page. (Id.) The last vehicle listed (# 47) appears less than two-thirds down from the top of the third page with more than four inches of blank space beneath it. (Id.) Thus, the schedule appears to be a complete document with no missing pages. The 1993 GMC van with Vehicle Identification Number 2GDHG31K6P4514993 does not appear on the schedule. (Id.) Mr. Spence identified the handwriting on the schedule as that of Melissa Reede, Adee's general manager, and stated that he was involved in the preparation of the list. (Spence Dep. at 21)
During his deposition, Mr. Spence acknowledged that the van involved in the accident was not on the schedule of vehicles that was attached to the application and then made the statement, "something is missing here because it should be on there." (Id. at 87) He did not state the vehicle was on the schedule when it was submitted and that it was somehow deleted, erased or otherwise altered; nor did he acknowledge that it may have been inadvertently left off the schedule by Adee personnel (Id.) Indeed, Mr. Spence never clarified what he meant to convey by making that statement that "it should be on there." (Id. at 84-104) He did, however, admit shortly after making that statement that the first time Adee asked for coverage on the vehicle in writing was in January 2003:
Q. The first time you asked for any coverage on the vehicle involved in the accident was January `03, correct?
A. In written form?
Q. Yes.
A. In written form, yes.
(Spence Dep. at 89)
It can be gleaned from the transcript that the document referred to was a January 29, 2003 fax between Adee's broker and St. Paul which stated, "Please add these four vehicles in the above policy number." One of the four vehicles listed was the van involved in the November 3, 2002 accident. (Id. at 88) After Mr. Spence admitted that a written request for coverage was not submitted to St. Paul until January 2003, he was asked if it was his understanding that he could receive coverage retroactively for vehicles that were in accidents. Mr. Spence replied, "This should have been on the policy from day one" and then stated that he would not agree with the assertion that the van was not included in the application despite being shown a copy of the application and schedule which contained no reference to the subject vehicle. (Id. at 89) Mr. Spence then explained that in November 2003 — after the accident — he orally requested that the vehicle be added during a telephone call with St. Paul after he was informed that the van was in an accident and that it was not covered under any policy issued by St. Paul. (Spence Dep. at 91) Mr. Spence further stated that he was told during the call that St. Paul would add the van to the Policy and that an endorsement should be sent to St. Paul. (Id. at 92)
The examining attorney asked Mr. Spence whether he ever requested St. Paul to add the subject vehicle to the policy prior to the accident to which Mr. Spence responded, "Yes" without further elaboration. (Id. at 94) Mr. Spence was then asked to look through Adee's documents to find any that "shows you requested coverage for this vehicle." (Id.) Mr. Spence did not refer to the handwritten schedule of vehicles and say that it was the document that requested coverage; rather, he referred to Adee's response to St. Paul's second request for underwriting information which he contended included the registration for the subject vehicle. (Id.) At this point in his testimony, Mr. Spence made it known that he was unaware when the accident occurred until informed by examining counsel that it occurred on November 3, 2002: "I don't recall the accident. I don't recall the date of the accident." (Id. at 95) The following exchange then took place:
Q. All I want is for you to identify the document or documents that list that vehicle and requesting coverage for that vehicle prior to November 3, 2002. That's all I'm asking.
A. This is the copy of the registration that we sent to St. Paul showing listing that vehicle.
Q. The document is a vehicle registration, correct?
A. Yes.
Q. That is not notification to St. Paul of anything, correct?
A. Yes, it is notification to St. Paul.
Q. Where is the documentation transmitting to St. Paul prior to November 3rd, 2002?
(Id. at 95-96) Adee's counsel responded to the last question by stating, "We don't have it here today . . . Let's move on." (Id. at 96)
It is undisputed that Adee did not respond to St. Paul's requests for vehicle registrations until, at the very earliest, November 19, 2002, which is the date of the letter from Adee to St. Paul purporting to respond to the underwriting requests and more than two weeks after the November 3, 2002 accident. (Def. Mem., Exh. B) Thus no vehicle registrations were sent to St. Paul until after the accident. It is also noteworthy that the Spence deposition was taken on April 12, 2007; Adee's summary judgment opposition papers were not submitted until July 2007, yet the only document related to the van and the accident Adee submitted was the default judgment entered in New York Supreme Court.
The testimony of Mr. Spence regarding the van is insufficient to create a factual issue. In support of summary judgment, St. Paul has come forward with the schedule submitted by Adee's broker to St. Paul. In response, Adee has submitted nothing other than the deposition testimony discussed above. Adee did not submit an affidavit of the schedule's draftsperson or Adee's insurance broker regarding the content of the schedule. In light of Mr. Spence's admission that no written request for coverage was provided to St. Paul until January 2003, and in the face of the evidence submitted by St. Paul, Mr. Spence's conclusory statement at his deposition that something was missing and that the van should have been on the handwritten schedule, falls short of creating a genuine issue of fact. See Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38, 45 (2d Cir. 1986) ("such testimony, unsupported by documentary or other concrete evidence . . . is simply not enough to create a genuine issue of fact in light of evidence to the contrary."); see also Jeffreys v. City of New York, 426 F.3d 549, 554-555 (2d Cir. 2005). Drawing all reasonable inferences in its favor, no reasonable jury could on this record find for Adee on this claim.
Conclusion
For the foregoing reasons, plaintiff St. Paul Fire Marine Insurance Company's motion for summary judgment is granted. Defendant Adee Truck Car Rental Inc.'s counterclaim is dismissed. The Clerk shall enter judgment in favor of plaintiff.
SO ORDERED.