Opinion
150210/17
11-04-2019
TOWER INSURANCE COMPANY OF NEW YORK, Plaintiff, v. Typhyne JOHNSON and Yvette Brantley, Defendants. Typhyne Johnson, Third-Party Plaintiff, v. HSBC Mortgage Corporation (USA), Northeast Agencies, Inc. and Lester Davis, Third-Party Defendants.
Law Office of James J. Croteau, Jersey City, New Jersey (Michael A. McGarry, Jr., of counsel), for plaintiff. Sutton Sachs Meyer PLLC, New York City (Zachary G. Meyer of counsel), for defendant/third-party plaintiff Typhyne Johnson. Phillips Lytle LLP, New York City (Heather H. Kidera of counsel), for third-party defendant HSBC Mortgage Corporation (USA). Wood Smith Henning & Berman LLP, New York City (Nancy Quinn Koba and Catherine S. Lyster of counsel), for third-party defendant Lester Davis.
Law Office of James J. Croteau, Jersey City, New Jersey (Michael A. McGarry, Jr., of counsel), for plaintiff.
Sutton Sachs Meyer PLLC, New York City (Zachary G. Meyer of counsel), for defendant/third-party plaintiff Typhyne Johnson.
Phillips Lytle LLP, New York City (Heather H. Kidera of counsel), for third-party defendant HSBC Mortgage Corporation (USA).
Wood Smith Henning & Berman LLP, New York City (Nancy Quinn Koba and Catherine S. Lyster of counsel), for third-party defendant Lester Davis.
Robert R. Reed, J.
Motion sequence numbers 003, 004, and 005 are consolidated for disposition.
This is a declaratory judgment action in which plaintiff Tower Insurance Company of New York (Tower) seeks, among other things, a declaration that it is not obligated to defend or indemnify defendant Typhyne Johnson (Johnson) in a personal injury action captioned Brantley v. Johnson , Index No. 26276/16 (Sup Ct, Bronx County) (hereinafter, the underlying action).
Third-party defendant HSBC Mortgage Corporation (USA) (hereinafter, HSBC) moves, pursuant to CPLR 3211 (a) (1) and (7), to dismiss the third-party complaint as against it with prejudice. In addition, HSBC seeks an order, pursuant to 22 NYCRR 130-1.1, assessing costs and attorney's fees against Johnson and her counsel (motion sequence number 003).
Johnson cross-moves, pursuant to CPLR 3211 (d), for a continuance to allow for discovery. Alternatively, Johnson requests a stay of disclosure under CPLR 3214 (b).
Tower moves for summary judgment: (1) declaring that it is not obligated to defend or indemnify Johnson in the underlying action and that it is not obligated to provide "medical payments to others" coverage to defendant Yvette Brantley (Brantley) in that action; and (2) dismissing Johnson's counterclaims against it (motion sequence number 004).
Johnson cross-moves, pursuant to CPLR 3212 (f), for a continuance to permit her to obtain discovery.
Third-party defendant Lester Davis (Davis) moves, pursuant to CPLR 3212, for summary judgment dismissing the third-party complaint as against him (motion sequence number 005).
Johnson again cross-moves, under CPLR 3212 (f), for a continuance to allow for discovery.
BACKGROUND
Tower's Policy
Tower issued dwelling package policy no. DPP2652045 for the residence located at 3553 Boller Avenue, Bronx, New York 10466 (the premises), for the one-year period from December 8, 2014 through December 8, 2015 to Johnson as the named insured (NY St Cts Elec Filing [NYSCEF] Doc No. 121 at 1). The policy describes the premises as a three-family home, which is owner-occupied (id. ). The declarations page states that "[t]he residence premises covered by this policy are located at the above-insured address ...." (id. ).
The insuring agreement of the policy for personal liability states, in pertinent part, that:
"LIABILITY COVERAGES
COVERAGE L — PERSONAL LIABILITY
If a claim is made or a suit is brought against an ‘insured’ for damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence’ to which this coverage applies, we will:
1. pay up to our limit for the damages for which the ‘insured’ is legally liable. Damages include prejudgment interest awarded against the ‘insured’;
* * *
COVERAGE M — MEDICAL PAYMENTS TO OTHERS
We will pay the necessary expenses that are incurred or medically ascertained within three years from the date of an accident causing ‘bodily injury.’ Medical expenses means reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services. This coverage does not apply to you to or regular residents of your household except ‘residence employees.’
(id. , form DL 24 01 07 8 at 2 of 5).
The policy contains the following exclusion:
"EXCLUSIONS
1. Coverage L — Personal Liability and Coverage M — Medical Payments to Others do not apply to ‘bodily injury’ or ‘property damage’:
* * *
b. (1) arising out of or in connection with a ‘business’ engaged in by an ‘insured.’ This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed or implied to be provided because of the nature of the ‘business’;
(2) arising out of the rental or holding for rental of any part of any premises by an ‘insured.’ This exclusion does not apply to the rental or holding for rental of an ‘insured location’:
(a) on an occasional basis if used only as a residence;
(b) in part for use only as a residence, unless a single family unit is intended for use by the occupying family to lodge more than two roomers or boarders; or
(c) in part, as an office, school, studio or private garage;
* * *
d. Arising out of a premises:
(1) owned by an ‘insured’;
(2) rented by an ‘insured’; or
(3) rented to others by an ‘insured;’ "
that is not an "insured location"
(id. ).
The Underlying Action
In the underlying action, commenced on September 15, 2016, Brantley alleges that, on January 26, 2015, she fell on a defective or dangerous condition on the driveway, sidewalk and/or driveway apron abutting the premises (NYSCEF Doc No. 122, verified complaint, ¶¶ 46-48). Brantley alleges that her injuries resulted from Johnson's carelessness, recklessness, and negligence (id. , ¶ 48).
Tower's Disclaimer
On December 22, 2016, Tower disclaimed coverage for the underlying claims because the premises did not qualify as a "residence premises," since Johnson did not reside at the premises on January 26, 2015 (NYSCEF Doc No. 124 at 2-3). Therefore, the premises were not an "insured location" as defined in the policy (id. ). Additionally, the accident arose out of the rental of premises that were not an "insured location" (id. at 4). However, Tower agreed to defend Johnson in the underlying action until the propriety of its disclaimer was resolved in a declaratory judgment action (id. at 1).
PROCEDURAL HISTORY
In this declaratory judgment action, Tower asserts three causes of action seeking declarations that it has no duty to defend or indemnify Johnson or otherwise provide coverage for the claims asserted in the underlying action (NYSCEF Doc No. 110, complaint, ¶¶ 15-20, 21-27, 28-32).
In her answer, Johnson asserted five counterclaims against Tower, asserting claims seeking declarations that Tower is required to defend and indemnify her in the underlying action, breach of contract, and breach of the covenant of good faith and fair dealing (NYSCEF Doc No. 111, Johnson's answer, ¶¶ 33-42, 43-52, 53-60, 61-68, 69-81). Johnson also asserted, among others, affirmative defenses of unclean hands, waiver, and estoppel (id. , ¶¶ 19, 20, 23).
Johnson subsequently brought a third-party action against HSBC, Davis, and third-party defendant Northeast Agencies, Inc. (Northeast) seeking recovery for breach of contract, negligence, indemnification, and contribution (NYSCEF Doc No. 88, third-party complaint, ¶¶ 47-53, 5-59, 60-67, 68-75, 76-84, 85-96, 97-104). According to Johnson, HSBC refinanced the mortgage loan on the premises (id. , ¶ 15). Johnson further alleges that HSBC obtained an insurance policy on the premises after contacting Davis and Northeast, who acted as insurance brokers (id. , ¶¶ 26, 35, 62, 70).
By decision and order dated June 5, 2017, the court denied HSBC's motion to dismiss, with leave to resubmit upon the lifting of the stay in the Matter of the Application of Maria T. Vullo, Supt. of Fin. Servs. of the State of NY, for an Order of Appointment As Ancillary Receiver of Castlepoint Natl. Ins. Co. , Index No. 153214/17 (Sup Ct, NY County) (NYSCEF Doc No. 89).
On November 17, 2017, the court granted Tower's motion to lift the stay of this action, and the action was restored to active status (NYSCEF Doc No. 90).
DISCUSSION
I. HSBC's Motion to Dismiss the Third-Party Complaint and for Costs and Attorney's Fees (Motion Sequence Number 003)/Johnson's Cross Motion for a Continuance
A. HSBC's Motion to Dismiss/Johnson's Cross Motion for a Continuance
The third-party complaint asserts five causes of action against HSBC. In the first cause of action, Johnson alleges that HSBC failed to render full performance under the mortgages by failing to properly procure insurance coverage for her reflecting the true status of the premises in Tower's policy (NYSCEF Doc No. 88, third-party complaint, ¶¶ 47-53). In the second cause of action, Johnson alleges that she was a direct and intended third-party beneficiary of Tower's policy, and that HSBC failed to properly procure insurance coverage under the mortgages (id. , ¶¶ 54-59). In the fifth cause of action, Johnson alleges that HSBC obtained Tower's policy on behalf of Johnson by and through the mortgages, and by doing so, impliedly undertook to do so properly, and then failed to do so, requiring HSBC to indemnify her (id. , ¶¶ 76-84). In the sixth cause of action, Johnson alleges that HSBC is required to indemnify her (id. , ¶¶ 85-96). In the seventh cause of action, Johnson alleges that once HSBC elected to procure insurance on the premises, it made a clear and unambiguous promise to do so in the proper manner under the mortgages, and that Johnson justifiably relied on this promise to do so (id. , ¶¶ 97-104).
HSBC argues that Johnson's third-party claims against it should be dismissed, because it had no duty to procure insurance coverage for her. As support, HSBC submits the consolidated mortgage on the property, executed by Johnson, consolidating two mortgages into a single consolidated mortgage, which provides that Johnson was solely responsible for procuring insurance (NYSCEF Doc No. 88, Kidera affirmation in support, exhibit A, consolidated mortgage, ¶ 5] ). According to HSBC, even if HSBC had elected to obtain insurance, it would not have been under any duty to procure any particular type of insurance, including a policy for Johnson's benefit.
In opposition to HSBC's motion, Johnson argues that the court should not consider HSBC's motion because it materially differs from its prior motion papers. Johnson asserts that she did not admit that she obtained the policy. Moreover, Johnson argues that HSBC owed her a duty of reasonable care when it procured the subject policy. According to Johnson, HSBC erroneously acquired a policy for a residence premises, despite the fact that it knew that she did not reside there. Johnson contends that she justifiably relied on HSBC's procurement of adequate insurance for the premises.
On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Leon v. Martinez , 84 NY2d 83, 87-88 [1994] ; see also JFK Holding Co., LLC v. City of New York , 68 AD3d 477, 477 [1st Dept 2009] ). However, "bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence are not presumed to be true and accorded every favorable inference" ( Biondi v. Beekman Hill House Apt. Corp. , 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000] [internal quotation marks and citation omitted] ). Where extrinsic evidence is submitted in connection with the motion, the standard of review "is whether the proponent of the pleading has a cause of action, not whether he has stated one" ( Dollard v. WB/Stellar IP Owner, LLC , 96 AD3d 533, 533 [1st Dept 2012] [internal quotation marks and citation omitted] ).
Dismissal is warranted pursuant to CPLR 3211 (a) (1) where the documentary evidence "resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" ( Fortis Fin. Servs. v. Fimat Futures USA , 290 AD2d 383, 383 [1st Dept 2002] [internal quotation marks and citation omitted] ). "[T]o be considered ‘documentary,’ evidence must be unambiguous and of undisputed authenticity" ( Fontanetta v. John Doe 1 , 73 AD3d 78, 86 [2d Dept 2010], citing Siegal, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 3211:10, at 21-22; see e.g. Bronxville Knolls v. Webster Town Ctr. Partnership , 221 AD2d 248, 248 [1st Dept 1995] [integrated note and mortgage constituted documentary evidence] ).
As a preliminary matter, the court shall consider HSBC's motion in its entirety. Although Johnson contends that HSBC's motion materially differs from its prior motion to dismiss, the court's decision and order dated June 5, 2017 only directed HSBC to resubmit its motion upon the lifting of the stay in Matter of the Application of Maria T. Vullo, Supt. of Fin. Servs. of the State of NY, for an Order of Appointment As Ancillary Receiver of Castlepoint Natl. Ins. Co. , Index No. 153214/17 (Sup Ct, NY County) (NYSCEF Doc No. 89).
"In the absence of an agreement to the contrary, the mortgagee is under no obligation to insure the mortgaged premises’ " ( Martin v. Liberty Mut. Ins. Co. , 92 AD3d 729, 731 [2d Dept 2012], quoting Beckford v. Empire Mut. Ins. Group , 135 AD2d 228, 232 [2d Dept 1998] ; accord Dichira v. Nawid , 126 AD3d 755, 756 [2d Dept 2015] ; Gurreri v. Associates Ins. Co. , 248 AD2d 356, 357 [2d Dept 1998] ). "A provision in a mortgage authorizing the mortgagee to obtain insurance at the expense of the mortgagor is not mandatory on the mortgagee, and will not, on failure to insure, create a liability against [it] in favor of the mortgagor" ( Beckford , 135 AD2d at 233 [internal quotation marks and citation omitted] ).
In Martin, supra , the plaintiffs alleged that a lender was negligent and breached a duty of care in failing to update a policy to include a joint owner as a named insured ( Martin , 92 AD3d at 731 ). The lender allegedly contacted the insurer to add itself as the mortgagee on the insurance policy, but failed to add the joint owner as a named insured (id. ). The Court held that the documentary evidence, i.e., the mortgage, conclusively established that the lender had no duty to insure the premises (id. ).
In Fairfax v. Dime Sav. Bank of Williamsburg (152 AD2d 503, 503 [1st Dept 1989] ), the plaintiff brought an action against the mortgagee defendants for failing to keep a fire insurance policy in effect. The original mortgage contained a standard provision obligating the mortgagor to pay to the mortgagee a monthly sum to be deposited in escrow and held for payment of the insurance premiums (id. ). The insurance policy covering the property expired when payments on the mortgage were in arrears and there was a negative balance in the escrow account (id. ). The mortgagee defendants had been paying the premiums on an insurance policy on the property, but did not pay for a renewal term of the policy ( id. at 504 ). The plaintiff alleged that the mortgagee defendants were negligent for failing to notify the plaintiff of the lapse in insurance coverage (id. ). The First Department observed that:
"[i]n accordance with both statute ( Real Property Law § 254 [4] ) and the express terms of the subject standard mortgage, the obligation to keep these premises insured rested upon the plaintiff mortgagor. The provision in a mortgage requiring monthly escrow payments is intended to guarantee the existence of a fund from which payment for items such as taxes and insurance premiums can be made when due, but even where such escrow fund is current the mortgagee is not under a duty to acquire new insurance coverage. In this case, where the repeated failure of the plaintiff to keep his payments up to date resulted in a negative balance in the escrow account at the time that the insurance expired, there was certainly no obligation on the mortgagee defendants to either continue to pay premiums from the nonexistent fund or to renew the policy"
(id. at 505 [citations omitted] ). Therefore, "[s]ince there [was] no basis ... under the mortgage agreement ... to find that the mortgagee defendants breached any duty to the plaintiff," the mortgagee defendants were entitled to summary judgment dismissing the complaint as against them (id. at 506).
Here, the consolidated mortgage provides that Johnson was required to obtain hazard or property insurance to cover all buildings and other improvements on the premises (NYSCEF Doc No. 88, Kidera affirmation in support, exhibit A, consolidated mortgage, ¶ 5] ). Furthermore, the consolidated mortgage states that:
"If I [borrower] fail to maintain any of the insurance coverages described above, Lender may obtain coverage, at Lender's option and my expense. Lender is under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage will cover Lender, but might or might not protect me, my equity in the Property, or the contents of the Property, against any risk, hazard or liability"
(id. ). Thus, even if HSBC obtained the insurance policy, as alleged by Johnson (NYSCEF Doc No. 88, Kidera affirmation in support, exhibit A, third-party complaint, ¶¶ 26, 50-52), it was under no contractual obligation to purchase any particular type of insurance coverage.
Moreover, although Johnson alleges that HSBC was negligent in procuring coverage (id. , ¶¶ 30, 57-58), "[t]he relationship between the parties is a contractual one between ... mortgagee and defendant as mortgagor, and [mortgagee] owed no legal duty independent of the mortgage" ( BAC Home Loans Servicing, LP v. McCombie , 133 AD3d 1252, 1253 [4th Dept 2015] [citations omitted] ).
In arguing that HSBC breached a duty of reasonable care, Johnson relies on Pacheco v. Heussler (56 AD2d 85 [4th Dept 1977] ). In Pacheco , the mortgagee bank had an option under the mortgage to pay insurance premiums, and received premium payments from the mortgagor ( id. at 86-87 ). The Fourth Department held that a jury properly found the mortgagee liable for its failure to act after it was not notified of a lapse in fire insurance coverage ( id. at 90 ). The Court held that the jury correctly found that the mortgagee breached the mortgage contract by failing to exercise its option under the mortgage (id. ). The mortgagee continued to collect funds sufficient to pay insurance premiums after the lapse of coverage (id. ). The Court further held that the plaintiffs could have reasonably relied on the collection of escrow payments as a representation by the mortgagee that the fire insurance had remained in force (id. ).
However, the First Department in Fairfax declined to follow Pacheco , noting that "[t]he fact that future escrow fund payments were contemplated, or may even have been accepted, would not impose a duty on the bank to acquire such fire insurance" ( Fairfax , 152 AD2d at 505-506 ; see also Beckford , 135 AD2d at 234 [declining to follow Pacheco "insofar as its determination may be interpreted as holding that the mere continuance of the escrow account was sufficient to impose a duty upon the mortgagee bank to acquire insurance coverage for the mortgaged premises"] ).
The court is bound by First Department precedent (see Mountain View Coach Lines v. Storms , 102 AD2d 663, 664 [2d Dept 1984] ["the doctrine of stare decisis requires trial courts in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or this court pronounces a contrary rule"]; see also Heymach v. Cardiac Pacemakers, Inc. , 183 Misc 2d 584, 588 [Sup Ct, Suffolk County 1999] ["The rule in New York is that a trial court must follow an Appellate Division precedent in its own Department, and, in the absence of a relevant decision in its own Department, a trial court is bound to follow applicable decisions in another Department of the Appellate Division, until its own Appellate Division decides otherwise"] ). Therefore, the court must follow Fairfax under the doctrine of stare decisis.
Additionally, Johnson argues that the court should deny HSBC's motion as premature, since essential facts are in the exclusive control of HSBC and other third-party defendants. Johnson submits an affidavit, in which she avers that HSBC obtained the policy after contacting Northeast and Davis and excluded her from those dealings (NYSCEF Doc No. 97, Meyer affirmation in opposition and in support of cross motion, exhibit B [Johnson aff, ¶¶ 8-13] ).
Johnson requested a stay of disclosure pursuant to CPLR 3214 (b), which states that "[s]ervice of a notice of motion under rule 3211, 3212, or section 3213 stays disclosure until determination of the motion unless the court orders otherwise." HSBC moved pursuant to CPLR 3211. Thus, the stay of disclosure was automatic, and the court has not directed otherwise.
CPLR 3211 (d) provides that:
"[s]hould it appear from affidavits submitted in opposition to a motion made under subdivision (a) or (b) that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion ... or may order a continuance to permit further affidavits to be had or disclosure to be had and may make such other order as may be just."
The party seeking the benefit of subdivision (d) should specify the facts that need to be developed in discovery and explain why those facts are material to the opposition (see Warshaw Burstein Cohen Schlesinger & Kuh, LLP v. Longmire , 106 AD3d 536, 537 [1st Dept 2013], lv dismissed 21 NY3d 1059 [2013], lv denied 33 NY3d 914 [2019] ; Bouley v. Bouley , 19 AD3d 1049, 1051 [4th Dept 2005] ). Nevertheless, the mere hope that discovery may reveal helpful information "does not warrant denial of the motion" ( Cracolici v. Shah , 127 AD3d 413, 413 [1st Dept 2013] ).
Johnson has failed to establish that any facts are material to her opposition. The consolidated mortgage has conclusively demonstrated that HSBC had no contractual obligation to insure the premises or purchase any type of insurance coverage (NYSCEF Doc No. 88, Kidera affirmation in support, exhibit A, consolidated mortgage, ¶ 5] ). Moreover, case law demonstrates that HSBC had no legal obligation independent of the consolidated mortgage (see BAC Home Loans Servicing, LP , 133 AD3d at 1253 ). Accordingly, HSBC's motion must be granted.
B. HSBC's Request for Costs and Attorney's Fees
HSBC argues that its costs and attorney's fees should be assessed against Johnson and her counsel for bringing and continuing the third-party action because: (1) there is no legal basis for Johnson's claims against HSBC; and (2) Johnson's claims are based upon plainly false factual allegations. Johnson requests that the court sua sponte impose sanctions on HSBC and its counsel, arguing that her third-party claims against HSBC are clearly not frivolous.
22 NYCRR 130-1.1 gives the court "in any civil action or proceeding before the court," the authority, in its discretion, to award "costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part" and/or to impose "financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part" ( 22 NYCRR 130-1.1 [a] ).
Frivolous conduct is defined as conduct that: (1) "is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law"; (2) "is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another"; or (3) "asserts material factual statements that are false" ( 22 NYCRR 130-1.1 [c] ). The burden of proof is on the party seeking the imposition of a sanction or an award of attorney's fees that the conduct of the opposing party was frivolous within the meaning of the rule (Matter of Miller v. Miller , 96 AD3d 943, 944 [2d Dept 2012] ).
Here, although HSBC is entitled to dismissal of Johnson's third-party claims asserted against it, HSBC has failed to demonstrate that Johnson's third-party claims are "completely without merit in law" ( 22 NYCRR 130-1.1 [c] [1]; cf. Jones v. Camar Realty Corp. , 167 AD2d 285, 286 [1st Dept 1990], appeal dismissed 77 NY2d 939 [1991], cert denied 502 US 940 [1991] ). Moreover, HSBC has not shown that the third-party complaint "asserts material factual statements that are false" ( 22 NYCRR 130-1.1 [c] [3] ). Therefore, HSBC's request for costs and attorney's fees is denied.
II. Tower's Motion for Summary Judgment (Motion Sequence Number 004)/Johnson's Cross Motion for a Continuance
A. Tower's Claims
Tower moves for summary judgment declaring that it is not obligated to defend or indemnify Johnson in the underlying action and that it is not obligated to provide medical payments to others coverage to Brantley for the injuries alleged therein. Specifically, Tower argues that the premises did not meet the description of a "residence premises" under the policy because Johnson did not reside at the premises on January 26, 2015. Tower further contends that it is entitled to dismissal of Johnson's counterclaims asserted against it, since there is no coverage for any of the claims in the underlying action.
To support its position, Tower submits an affidavit from a liability claims manager, Suzanne Knudsen (Knudsen), indicating that she spoke with Johnson over the telephone on September 30, 2016 (NYSCEF Doc No. 108, Knudsen aff, ¶ 13). Johnson told her that she was not living at the premises on that date; rather, she was living at 39 Crawford Street, Yonkers, New York 10705 (id. ). Johnson stated that she had been living there for the past 17 years (id. ). In a signed statement, Johnson also admitted that she did not live at the premises on September 30, 2016, and stated that she "never lived at [the premises] as it is an investment property" (NYSCEF Doc No. 109, Mattucci aff, ¶¶ 7-10, exhibit 1). Furthermore, Tower points out that Johnson admitted in her answer that she did not reside at the premises on January 26, 2015 (NYSCEF Doc No. 111, Johnson's answer, ¶ 4).
In response, Johnson argues that Tower has waived its right to disclaim coverage under the policy. According to Johnson, Tower knew that she did not reside at the premises, but accepted insurance premium payments under the policy. Johnson further contends that Tower's unclean hands should prevent any disclaimer under the policy. As argued by Johnson, Tower should be prevented from disclaiming coverage, since it took 79 days from when the affidavit of service in the underlying action was notarized to disclaim coverage.
Moreover, Johnson asserts that Tower should be equitably estopped from disclaiming coverage. In this regard, Johnson contends that Tower's control of her defense has prevented her from: (1) impleading other necessary parties; (2) seeking dismissal of the underlying action on procedural grounds; (3) reviewing her answer, since it was not uploaded to NYSCEF; and (4) otherwise defending the underlying action. Furthermore, Johnson maintains that Tower's motion is based on contradictory evidence and inadmissible hearsay. Alternatively, Johnson argues that court should deny Tower's motion because there are facts currently unavailable to her or should grant her a continuance to obtain disclosure.
"It is well settled that ‘the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact’ " ( Pullman v. Silverman , 28 NY3d 1060, 1062 [2016], quoting Alvarez v. Prospect Hosp. , 68 NY2d 320, 324 [1986] ). "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers" ( Winegrad v. New York Univ. Med. Ctr. , 64 NY2d 851, 853 [1985] ). "Once such a prima facie showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form sufficient to raise material issues of fact which require a trial of the action" ( Cabrera v. Rodriguez , 72 AD3d 553, 553-554 [1st Dept 2010] ). However, "[b]ald conclusory assertions, even if believable, are not enough [to defeat summary judgment]" ( S.J. Capelin Assoc. v. Globe Mfg. Corp. , 34 NY2d 338, 342 [1974] [internal quotation marks and citation omitted] ).
"[An insurer's] duty to defend is triggered by the allegations contained in the underlying complaint" ( BP A.C. Corp. v. One Beacon Ins. Group , 8 NY3d 708, 714 [2007] ). Nonetheless, "an insurer can be relieved of its duty to defend if it establishes as a matter of law that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision" ( Allstate Ins. Co. v. Zuk , 78 NY2d 41, 45 [1991] ). Stated otherwise, even if the complaint triggers a duty to defend, that duty is "not an interminable one, and will end if and when it is shown unequivocally that the damages alleged would not be covered by the policy" ( Sturges Mfg. Co. v. Utica Mut. Ins. Co. , 37 NY2d 69, 74 [1975] ).
"As with any contract, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning ... and the interpretation of such provisions is a question of law for the court" ( White v. Continental Cas. Co. , 9 NY3d 264, 267 [2007] [citation omitted] ). If the policy terms are ambiguous, the parties may submit extrinsic evidence as an aid in construction, and any ambiguity must be construed in favor of the insured and against the insurer ( Matter of Mostow v. State Farm Ins. Cos. , 88 NY2d 321, 326 [1996] ; State of New York v. Home Indem. Co. , 66 NY2d 669, 671 [1985] ; 242-44 E. 77th St., LLC v. Greater NY Mut. Ins. Co. , 31 AD3d 100, 105 [1st Dept 2006] ). Ambiguity has been defined as "reasonably susceptible of more than one interpretation" ( Chimart Assoc. v. Paul , 66 NY2d 570, 573 [1986] ). Contract language is unambiguous if it has "a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference of opinion" ( Breed v. Insurance Co. of N. Am. , 46 NY2d 351, 355 [1978], rearg denied 46 NY2d 940 [1979] ).
Here, Tower's policy excludes coverage for personal liability of an insured for bodily injury arising out of premises that are not an "insured location" (NYSCEF Doc No. 108, Knudsen aff, exhibit 1, form DL 24 01 07 88 at 2 of 5). The policy does not provide medical payments to others coverage for bodily injury arising out of premises that are not an "insured location" (id. ). The policy excludes coverage for claims arising out of the rental of any premises by an insured that are not an "insured location" (id. ). The court finds the term "insured location" to be clear and unambiguous. The policy defines "insured location," as relevant here, as the "residence premises" (id. , form DL 24 01 07 88 at 1 of 5). As relevant here, "residence premises" is defined as a "two, three or four family dwelling where you reside in at least one of the family units and which is shown in the ‘residence premises’ in the Declarations" (id. ).
Tower has made a prima facie showing of entitlement to judgment as a matter of law, based upon Johnson's admissions that she did not reside at the premises on January 26, 2015. Knudsen's affidavit states that Johnson admitted that she did not reside at the premises when she spoke with her on September 30, 2016, and had not been living there for the previous 17 years (NYSCEF Doc No. 108, Knudsen aff, ¶ 13). This affidavit "is admissible for the purpose of showing [her] non-residence when the accident occurred" ( Tower Ins. Co. of NY v. Hossain , 134 AD3d 644, 644 [1st Dept 2015] ; see also Tower Ins. Co. of NY v. Brown , 130 AD3d 545, 545-546 [1st Dept 2015] [insurer made prima facie showing based on admissions that defendant "did not reside at the premises when the incident occurred, as required by the policy"] ). Moreover, Johnson admitted in her answer that she did not reside at the premises on January 26, 2015 (NYSCEF Doc No. 111, Johnson's answer, ¶ 4). "Facts admitted by a party's pleadings constitute judicial admissions" ( Falkowski v. 81 & 3 of Watertown , 288 AD2d 890, 891 [4th Dept 2001], citing Prince, Richardson on Evidence § 8-215, at 523-524 [Farrell 11th ed] ). "That fact is thus not in controversy" (id. ).
Johnson argues that Tower waived its right to disclaim coverage under the policy. Waiver "is a voluntary and intentional relinquishment of a known right" ( Albert J. Schiff v. Flack , 51 NY2d 692, 698 [1980] ). However, contrary to Johnson's contention, "where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable" (id. ; see also Zappone v. Home Ins. Co. , 55 NY2d 131, 134 [1982] ). Moreover, "[s]ince the policy never provided coverage for these circumstances in the first place, the timeliness of plaintiff's disclaimer is irrelevant" ( State Farm & Cas. Co. v. Guzman , 138 AD3d 503, 503 [1st Dept 2016], lv dismissed and denied in part 28 NY3d 1101 [2016] ).
Although Johnson relies on United States Life Ins. Co. in the City of NY v. Blumenfeld (92 AD3d 487, 489 [1st Dept 2012] ), in which the First Department noted that "an insurer that accepts premiums after learning of facts that it believes entitles it to rescind the policy has waived the right to rescind," Tower is not seeking to rescind the policy for a material misrepresentation. As discussed above, there is no coverage because Johnson did not reside at the premises on January 26, 2015. In addition, Tower is not seeking to declare the policy void (see e.g. Robbins v. Springfield Fire & Mar. Ins. Co. , 149 NY 477, 484 [1896] ["The rule that an insurance company will not be permitted to defeat a recovery upon a policy issued by it by proving the existence of facts which would render it void, where it had full knowledge of them when the policy was issued, is too well established by the authorities in this state to require further discussion"] ).
In addition, Johnson contends that Tower should be estopped from disclaiming coverage based upon Tower's control of her defense in the underlying action. Johnson points out that: (1) her answer in the underlying action has not been e-filed; (2) a pre-answer motion to dismiss was not made; and (3) most, if not all, pre-trial disclosure has now been completed.
"The doctrine of estoppel precludes an insurance company from denying or disclaiming coverage where the proper defending party relied to its detriment on that coverage and was prejudiced by the delay of the insurance company in denying or disclaiming coverage based on the loss of the right to control its own defense"
( Liberty Ins. Underwriters, Inc. v. Arch Ins. Co. , 61 AD3d 482, 482 [1st Dept 2009] [internal quotation marks and citation omitted] ). However, "[p]rejudice is established only where the insurer's control of the defense is such that the character and strategy of the lawsuit can no longer be altered" ( Federated Dept. Stores, Inc. v. Twin City Fire Ins. Co. , 28 AD3d 32, 39 [1st Dept 2006] ).
Johnson has failed to establish any prejudice resulting from Tower's control of her defense in the underlying action. Tower undertook Johnson's defense in the underlying action subject to a reservation of rights (NYSCEF Doc No. 124). As noted by the First Department, "[t]he purpose of a reservation of rights is to prevent an insured's detrimental reliance on the defense provided by the insurer. The reservation is a sufficient preventative to reliance even if the insurer later disclaims on a basis different from the ground originally asserted in the reservation of rights" ( Federated Dept. Stores, Inc. , 28 AD3d at 37-38 ). When Tower issued its reservation of rights in December 2016 (NYSCEF Doc No. 124), three months after Brantley brought the underlying action in September 2016 (NYSCEF Doc No. 122), the action was not on the trial calendar or on the eve of trial (see 206-208 Main St. Assoc., Inc. v. Arch Ins. Co. , 106 AD3d 403, 407 [1st Dept 2013] ; United States Fid. & Guar. Co. v. New York, Susquehanna & W. Ry. Corp. , 275 AD2d 977, 978 [4th Dept 2000] ). Thus, Johnson has not shown that Tower's control of her defense irreparably changed the character and strategy of the underlying action.
Furthermore, Johnson's reliance on the unclean hands doctrine is without merit.
"[T]he doctrine of unclean hands bars the grant of equitable relief where the defendant proves: ‘(1) that the plaintiff is guilty of immoral, unconscionable conduct directly related to the subject matter in litigation; (2) that the conduct was relied upon by the defendant; and (3) that the defendant was injured thereby’ "
( Atlantic Cas. Ins. Co. v. Coffey , 548 Fed Appx 661, 664 [2d Cir 2013], quoting Liz v. Saporito , 909 F Supp 149, 174 [ED NY 2012]; see also Weiss v. Mayflower Doughnut Corp. , 1 NY2d 310, 316 [1956] ["The doctrine of unclean hands is only available when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct"] ). Johnson asserts that Tower knew that the premises were not her primary residence, as evidenced by Tower's disclaimer letter, since it was sent to the premises and her address in Yonkers (NYSCEF Doc No. 134, Meyer affirmation in opposition and in support of cross motion, exhibit A). However, Johnson has failed to demonstrate that Tower is guilty of immoral or unconscionable conduct, or that she has been injured by such conduct.
CPLR 3212 (f) provides that "[s]hould it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just." "A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence’ " ( DaSilva v. Haks Engrs., Architects & Land Surveyors, P.C. , 125 AD3d 480, 482 [1st Dept 2015], quoting Bailey v. New York City Tr. Auth. , 270 AD2d 156, 157 [1st Dept 2000] ). However, "[t]he mere hope that further disclosure might uncover evidence likely to help [a defendant's] case" provides no basis for postponing summary judgment ( Maysek & Moran v. Warburg & Co. , 284 AD2d 203, 204 [1st Dept 2001] ).
In this case, Johnson has failed to show that discovery would lead to relevant evidence. Indeed, it is undisputed that she did not reside at the premises on January 26, 2015. While Johnson asserts that Tower knew that she did not reside there, she has failed to demonstrate that there is a "likelihood that there is relevant evidence in [Tower's] exclusive knowledge ... or [that] further discovery might reveal the existence of such evidence" ( Atomergic Chemetals Corp. v. Hartford Acc. & Indem. Co. , 193 AD2d 551, 551 [1st Dept 1993] [internal quotation marks and citations omitted] ). Thus, Johnson has failed to establish that Tower's motion is premature (see Tower Ins. Co. of NY v. Hossain , 134 AD3d at 644 ["The court erred in finding that defendant Singletary, a tenant in the premises and the plaintiff in the underlying action, established that discovery might lead to evidence that would defeat plaintiff's motion"]; see also Tower Ins. Co. of NY v. Brown , 130 AD3d at 546 ).
In light of the above, Tower has established that the subject policy does not provide coverage for the claims asserted against Johnson in the underlying action. Johnson has failed to raise an issue of fact in response to Tower's motion. Accordingly, Tower is entitled to declarations that it is not obligated to defend or indemnify Johnson in the underlying action or provide medical payments coverage to Brantley.
B. Johnson's Counterclaims Against Tower
Tower is also entitled to dismissal of Johnson's counterclaims for breach of contract, declaratory judgment, and breach of the covenant of good faith and fair dealing (NYSCEF Doc No. 111, Johnson's answer, first, second, third, fourth, and fifth counterclaims). As previously noted, Tower has demonstrated that there is no coverage for any of the claims asserted in the underlying action. Johnson has failed to raise an issue of fact. Consequently, Johnson's counterclaims against Tower are dismissed.
III. Davis's Motion for Summary Judgment (Motion Sequence Number 005)/Johnson's Cross Motion for a Continuance
The third-party complaint asserts three claims against Davis. The third cause of action alleges that a special relationship existed between Johnson and Davis, and that Johnson failed to provide appropriate coverage (NYSCEF Doc No. 155, third-party complaint, ¶¶ 60-67). The fourth cause of action asserts that Davis breached a duty of reasonable care when he failed to provide appropriate coverage (id. , ¶¶ 68-75). The sixth cause of action alleges that Johnson is entitled to indemnification and/or contribution from Davis (id. , ¶¶ 92-96).
Davis now moves for summary judgment, arguing that he fulfilled his common-law duty to procure the homeowners' policy. Davis contends that Johnson received Tower's policy, and is presumed to know the contents of the policy. In addition, Davis maintains that he did not have a special relationship with Johnson, since they only had a typical customer-broker relationship with no direct contact from December 2006 through the date of the accident.
Davis avers that, at all relevant times, he was an exclusive agent for Allstate Insurance Company (Allstate) (NYSCEF Doc No. 158, Davis aff, ¶ 3). In 2004, he purchased a book of business from another Allstate agent, which included Johnson's account (id. , ¶ 4). Johnson had an existing homeowners' deluxe insurance policy, policy number 003982347, issued by Allstate, covering her primary residence located at 3553 Boller Avenue, Bronx, New York 10466 (id. ). Allstate's policy was originally issued on November 14, 1991, which was renewed 14 times through December 2006 (id. , ¶ 5). After Davis purchased the book of business, he was listed as the broker of record on all active policies, including Johnson's policy (id. , ¶ 6).
According to Davis, "[o]ne of his employees would have contacted Johnson to advise that the Allstate Policy was not being renewed, and that, if requested, his firm could obtain a replacement homeowner's policy" (id. , ¶ 8). "As requested by Johnson, Davis obtained a replacement homeowners' policy from Tower" (id. , ¶ 9). Davis is unable to locate his copy of the insurance application (id. ). Tower issued dwelling package policy no. DPP2652045 for the initial policy period from December 8, 2006 through December 8, 2007 (id. , ¶ 10). On January 28, 2016, Johnson spoke with one of Davis's employees, Rocio Salguero (Salguero), to request that the mortgage company be removed from the policy (id. , ¶ 28). On February 17, 2016, Johnson again spoke with Salguero, and told her that she did not live at the premises, and that her mailing address should be changed to 39 Crawford Street, Yonkers, New York (id. , ¶ 29).
In response, Johnson contends that Davis has failed to establish prima facie entitlement to summary judgment. Additionally, Johnson argues that Davis was negligent in securing a homeowners' policy. Alternatively, Johnson requests a continuance to pursue discovery.
To support her position, Johnson offers an affidavit in which she avers that, at some point, Allstate dropped coverage on the premises for reasons unknown to her (NYSCEF Doc No. 179, Johnson aff, ¶ 5). HSBC acquired liability coverage on her behalf by contacting Northeast and Davis to obtain coverage on the premises (id. , ¶ 9). HSBC provided information regarding the ownership and occupancy of the premises (id. , ¶ 7). Johnson states that she never provided any information regarding the ownership or occupancy of the premises when purchasing the policy or subsequent renewals (id. , ¶ 8). According to Johnson, she never directed Davis to obtain a three-family owner-occupied insurance policy for the premises (id. , ¶ 9).
"As a general principle, insurance brokers have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage" ( Voss v. Netherlands Ins. Co. , 22 NY3d 728, 734 [2014] [internal quotation marks and citation omitted] ). Therefore, "[t]o set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy" ( American Bldg. Supply Corp. v. Petrocelli Group, Inc. , 19 NY3d 730, 735 [2012] ). "A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage" ( Hoffend & Sons, Inc. v. Rose & Kiernan, Inc. , 7 NY3d 152, 158 [2006] ).
"Where a special relationship develops between the broker and client, we have also indicated that the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage" ( Voss , 22 NY3d at 735 ). The Court of Appeals has recognized three situations that may give rise to a special relationship:
"(1) the agent receives compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specifically relied on’ "
(id. , quoting Murphy v. Kuhn , 90 NY2d 266, 272 [1997] [citations omitted] ).
Here, Davis has failed to establish prima facie entitlement to summary judgment.
"Where an affiant's knowledge of the facts alleged is obtained from ‘unnamed and unsworn employees or unidentified and unproduced work records, the affidavit lacks any probative value’ and fails to fulfill the requirement of CPLR 3212 (b) that the party seeking summary judgment present affidavits citing material facts from affiants with knowledge of those facts"
( Residential Credit Solutions, Inc. v. Gould , 171 AD3d 638, 641 [1st Dept 2019], quoting Dempsey v. Intercontinental Hotel Corp. 126 AD2d 477, 479 [1st Dept 1987] ; see also CPLR 3212 [b] ["The affidavit shall be by a person having knowledge of the facts; it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit"] ).
Although Davis states that "[o]ne of [his] employees would have contacted Johnson to advise the Allstate Policy was not being renewed and that, if requested we could obtain a replacement homeowners policy from another insurance company," and that "[a]s requested by Johnson, a replacement homeowners policy was obtained from [Tower]" (NYSCEF Doc No. 158, Davis aff, ¶¶ 8, 9 [emphasis added] ), his affidavit does not recite material facts of which he has personal knowledge. Notably, Davis does not state which business records he is relying on or identify the employees who spoke with Johnson in 2006 when Tower's policy was obtained. Moreover, Davis's affidavit acknowledges that his company is unable to locate its copy of the insurance application (id. ). Therefore, Davis's affidavit lacks probative value.
Furthermore, even though Davis contends that Johnson failed to read Tower's policy, the Court of Appeals has held that "[t]he failure to read the policy, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action against a broker" (American Bldg. Supply Corp. , 19 AD3d at 736-736; see also West 70th Owners Corp. v. Hiram Cohen & Son, Inc. , 166 AD3d 507, 507 [1st Dept 2018] ).
Accordingly, Davis's motion must be denied, regardless of the sufficiency of Johnson's opposing papers (see Winegrad , 64 NY2d at 853 ).
Davis contends that Johnson conceded, in opposition to his motion, that she did not specifically request that Davis procure an insurance policy covering the premises. However, CPLR 3212 (b) provides that "[i]f it shall appear that any party other than the moving party is entitled to a summary judgment, the court may grant such judgment without the necessity of a cross-motion" [emphasis supplied] ). Here, Davis was the moving party. Accordingly, the court cannot search the record pursuant to CPLR 3212 (b) and grant summary judgment in his favor (see Diamond Roofing Co., Inc. v. PCL Props., LLC , 153 AD3d 1577, 1579 [4th Dept 2017] [court "erred in searching the record pursuant to CPLR 3212 (b) and granting summary judgment on an account stated theory to plaintiff, the moving party"] ).
Since Davis has failed to establish prima facie entitlement to summary judgment, the court need not decide whether Davis's motion should have been denied pursuant to CPLR 3212 (f) (see Amaral v. Metro N. Commuter R.R. Co. , 7 Misc 3d 1006 [A], *5 [Sup Ct, Bronx County 2005] ). Therefore, Johnson's cross motion for a continuance to obtain disclosure is denied.
CONCLUSION
Accordingly, it is
ORDERED that the motion (sequence number 003) of third-party defendant HSBC Mortgage Corporation (USA) for summary judgment is granted, and the third-party complaint is severed and dismissed against said third-defendant with costs and disbursements as taxed by the Clerk, and is otherwise denied; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly; and it is further
ORDERED that the cross motion of defendant/third-party plaintiff Typhyne Johnson is denied; and it is further
ORDERED that the branch of plaintiff Tower Insurance Company of New York's motion (sequence number 004) for summary judgment on the first, second, and third causes of action seeking declarations that it is not obligated to defend or indemnify defendant Typhyne Johnson in the action captioned Brantley v. Johnson , Index No. 26276/16 (Sup Ct, Bronx County) and that it is not obligated to provide medical payments to others coverage to defendant Yvette Brantley in that action is granted; and it is further
ADJUDGED and DECLARED that plaintiff Tower Insurance Company is not obligated to defend or indemnify defendant Typhyne Johnson in the action captioned Brantley v. Johnson , Index No. 26276/16 (Sup Ct, Bronx County) or provide medical payments to others coverage to defendant Yvette Brantley in that action; and it is further
ORDERED that the branch of plaintiff Tower Insurance Company of New York's motion (sequence number 004) that seeks summary judgment dismissing defendant/third-party plaintiff Typhyne Johnson's counterclaims is granted; and it is further
ORDERED that the balance of this action is severed and continued; and it is further
ORDERED that the cross motion of defendant/third-party plaintiff Typhyne Johnson is denied; and it is further
ORDERED that the motion (sequence number 005) of third-party defendant Lester Davis for summary judgment is denied; and it is further
ORDERED that that the cross motion of defendant/third-party plaintiff Typhyne Johnson is denied.