Opinion
22713
October 28, 2002.
The plaintiffs were represented by Gerold Mallow, Esq. of Mallow, Konstam Hager, P.C., 321 Broadway, New York, New York 10007.
Defendant was represented by Joel D. Epstein, Esq. of Mcdonnell, Adels Goodstein, P.C., 5 Dakota Drive, Suite 308, Lake Success, New York 11042.
MEMORANDUM
Is the growing problem of identity theft a new assault on the public policy deterring auto insurance disclaimers based upon fraudulent inducement.?
Plaintiff moves for a framed issue hearing seeking to strike a series of affirmative defenses in a negligence action; alleging an intentional accident, identity theft, denial of ownership and permission, and further asserting that this vehicle was used in a series of intentional accidents within a one-month period.
The name and address of the offending driver listed in the police report is Jacques A. Baker, 129-27 153rd Street, Jamaica, New York. The court record indicates that a process server, in his affidavit of service, alleges service on one Jacques A. Baker by substituted service upon a co-tenant of the premises, followed by appropriate mailing.
The answer in question was served by the attorneys for an insurance carrier on behalf of one Jacques A. Baker, a non-insured, whose learner's permit had been stolen and who resided at an address significantly far removed from the location of service However, there is no denial of the existence of a Jacques Baker at the service location. No one has appeared for the self-styled Jacques A. Baker — the individual who, according to the police report owned and was driving the offending vehicle at the time of the accident and stated that he lived at the address at which service was effected.
In his affidavit Jacques Baker asserted that he resided on Beverly Road, Brooklyn, New York and that before living there, he lived on Highland Avenue, Jamaica New York,
This court, after hearing initial argument and reviewing the papers, re-called the matter after additional papers were requested.
DISCUSSION
The New York policy of protecting victims of automobile accidents begins with the requirement that vehicles using New York highways possess liability coverage. Liberty Mutual Ins. Co. v McClellan, 127 A.D.2d 767(2d Dept. 1987). Those unable to procure same independently are required to obtain insurance through an assigned risk plan. Insurance law s. 5301 et seq. To further protect victims of automobile accidents, the uninsured, or under-insured statute was legislated. This very strong public policy, expressed in several legislative enactments, has created an apparently fertile field for various forms of fraud, which serve to inflate the cost of required insurance.
Effective July 1, 1965, "the insurance law in New York was amended to require that each automobile liability policy issued in this state provide coverage for its 'insureds' as defined by the statute . . . for injuries suffered against an owner or operator of an uninsured motor vehicle . . . the statute further provided that an automobile liability policy issued without this provision 'shall be construed as if such condition were embodied therein'(Insurance Law s 167 subd. 2-a) [This provision is commonly known as the New York Endorsement]." Rittenhouse v. Motor Vehicle Accident Indemnification Corp., 48 A.D.2d 1 (3d Dept. 1975) For the current section covering this area see Insurance Law 3420(f)(1).
Identity theft alone "'victimiz[es] an alarming 500,000 Americans each year'." New Hampshire Indemnity Company v. Omar Flores, Roberto Chever and Rogelio Hernandez, 2002 WL 377029 (N.Y.Sup)
The public policy of New York State has been enforced by the New York Courts which have refused to allow insurance companies the defense of fraudulent inducement after the issuance of a policy with respect to innocent, injured victims of the fraud.
See, e.g.,New Hampshire Indemnity Company v. Omar Flores, Roberto Chever and Rogelio Hernandez, supra, (where owner/insurer of vehicle was a victim of identity theft, matter was dismissed as against him, but insurer was held responsible for insuring the lawful operator of the vehicle);Taradena v. Nationwide Mutual Ins. Co., 239 A.D.2d 876(4th Dept. 1997) (policy void ab initio with respect to the claims of the owner/driver of the car who procured insurance through another, but insurer remains obligated to defend and indemnify in action brought by injured third party); McClellan, supra, 127 A.D.2d 767 (insurer held responsible with respect to intervening accident where in reinstating policy it accepted fraudulent affidavit of owner driver claiming he had been in no accidents since the policy lapsed); Olivio v. Government Emp. Ins. Co. of Washington, D.C., 46 A.D.2d 437 (2d Dept. 1975) (insured's misrepresentations on application did not justify its reduction of coverage amounts).
This is due to the interplay of Vehicle and Traffic Law s. 313 which prohibits the cancellation of a policy of automobile insurance for which a certificate of insurance has been issued until at least twenty days after the mailing of a notice of termination to the insured and Insurance Law s. 3425. Vehicle and Traffic Law s 313 "supplants and insurance carrier's common-law right [codified in Insurance law s. 3425] to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provision may only be effected prospectively." McClellan, supra, at 769.
The parties, on argument, have indicated that as to the plaintiff herein, there is no allegation of fraud or collusion with the defendant. Thus, the plaintiff should be afforded, this Court holds, all of the protections enunciated in the public policy of this State.
Nonetheless, it was argued, by the insurer of the offending vehicle that the assumption of the identity of Jacques Baker by the owner-operator of the vehicle constituted fraud (as yet unproven) sufficient to vitiate State Farm's obligation to defend the within action on the merits and before a jury. That position, this Court holds, is contrary to the overwhelming public policy of this State as expressed in statute and in case law.
The motion is granted to the extent of striking affirmative defenses six through ten because this Court had sufficient information before it to grant this relief without conducting a framed issue hearing on the question of identity. This Court was limited in its ability to fashion more complete relief such as would be available through a motion for summary judgment on the question of ownership, addressing obligations of defense and coverage or a motion for a default judgment against the imposter.
However, in light of the prevalence of identity theft today, our fact pattern is likely to be repeated. Thus, it is appropriate to offer some comment on these issues. State Farm's obligation to appear and defend in this suit, must be weighed in terms of the strong public policy heretofore expressed and depends upon the efficacy of the service upon Jacques A. Baker at the address provided in the police report in conferring jurisdiction over the owner driver actually involved in this accident. This, in turn, devolves to the operation of the provision for service upon unknown parties, Alexander, Practice Commentaries, McKinney's, CPLR s. 1024, 1997, and to the judicial refusal to entertain challenges to jurisdiction when a party has provided an incorrect address.Gardner v. Tully, 227 A.D.2d 587 (2d Dept. 1996)Harrington v. Dickinson, 159 A.D.2d 876(3d Dept. 1990).
"The defendant whose name is unknown must be described in such a way as to fairly apprise the party that he or she is an intended defendant. . . . whenever the court's jurisdiction is invoked, 'the defendant [must] be named or described in such form as will properly identify the defendant and give notice of opportunity to defend'." Here, the defendant was served with the summons and verified complaint which contained a description of the date and time of the accident, and identified with particularity the car that was driven.
It is not a significant extension of the law to hold that where, as here, an individual gave the police a name and an address at the scene, the plaintiff may rely upon that name and address for purposes of service. Consequently, it may fairly be stated that an appearance should be given under these circumstances.
This Court concludes that appearing for a non-owner to whom a policy of insurance was never issued is an inappropriate way to test the issue of fraud in the inducement and that a motion for summary judgment and/or the validity of service upon the truly intended defendant is a better mechanism. As no fraud is alleged on the part of the plaintiff in such matters, a trial, by a jury, is the appropriate mechanism.