Opinion
111613/05.
Decided March 26, 2010.
Firm: JEFFREY K. LEVINE, ATTORNEY FOR THE PLAINTIFF.
Firm: MIRANDA SAMBURSKY SLONE SKLARIN VERVENIOTIS LLP, ATTORNEY FOR THE DEFENDANT.
In this declaratory judgment action, plaintiff moves for an order to seal this motion and for summary judgment on the complaint; defendant cross-moves for summary judgment to dismiss the complaint (collectively, motion sequence number 012). For the following reasons, the motion is granted in part and denied in part, and the cross motion is denied.
BACKGROUND
On January 20, 2003, plaintiff Karina Cifuentes (Cifuentes) suffered personal injury through the negligence of a personal trainer employed by non-party AM Fitness Management, Inc. d/b/a Dolphin Fitness Clubs International, Inc. (AM). See Notice of Motion, Exhibit F. Defendant Penn-America Group, Inc. (Penn-America) is AM's insurance carrier. See Notice of Motion, Exhibit H. The commercial general liability insurance policy (the AM insurance policy) that Penn-America issued to AM provides, in pertinent part, as follows:
SECTION IV — COMMERCIAL GENERAL LIABILITY CONDITIONS
2. Duties In The Event Of Occurrence, Offense, Claim Or Suit.
a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:
(1)How, when and where the "occurrence" or offense took place;
(2)the names and addresses of any injured persons and witnesses; and
(3)The nature and location of any injury or damage arising out of the "occurrence" or offense.
b. If a claim or "suit" is brought against any insured, you must:
(1)Immediately record the specifics of the claim or "suit" and the date received; and
(2)Notify us as soon as practicable.
You must see to it that we receive written notice of the claim or "suit" as soon as practicable.
c. You and any other involved insured must:
(1)Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit;"
(2)Authorize us to obtain records and other information;
(3)Cooperate with us in the investigation or settlement of the claim or defense against the "suit;" and
(4)Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.
d. No insured will, except at the insured's own cost, voluntarily make a payment, assume any obligation, or incur any expenses, other than for first aid, without our consent.
Notice of Motion, Exhibit H, at 4-5.
The parties agree that AM sent Penn-America an accident report on January 24, 2003, and that Penn-America thereafter sent Cifuentes a letter confirming receipt of that accident report on January 28, 2003. See Notice of Cross Motion, Bennett Affidavit, ¶¶ 11-12; Exhibits B, C; Notice of Motion, Exhibit B. The parties also agree that Cifuentes's attorneys sent Penn-America a notice of claim on March 18, 2004, and that Penn-America thereafter sent Cifuentes's attorneys a letter confirming receipt of that notice on March 25, 2004. See Notice of Cross Motion, Bennett Affidavit, ¶¶ 13-14; Exhibits D, E; Notice of Motion, Exhibit D.
Cifuentes commenced a personal injury action (the underlying action) against AM in this court on September 17, 2004 (Index Number 113445/04). See Notice of Motion, Exhibit F. AM defaulted in the underlying action, and Cifuentes eventually obtained a default judgment against AM, which was entered, after inquest, on May 18, 2005. See Notice of Cross Motion, Verveniotis Affirmation, ¶¶ 15-20; Exhibits G, H, K. Cifuentes claims that she had sent Penn-America a letter notifying Penn-America about the underlying action, as well as a courtesy copy of the summons and complaint, on September 17, 2004. See Notice of Motion, Levine Affirmation, at 10-11; Exhibit G. Penn-America denies ever having received this letter. See
Notice of Cross Motion, Verveniotis Affirmation, ¶¶ 21-53. Cifuentes has presented affidavits and deposition testimony from her former counsel Steven Shanker (Shanker), his associate Steven Fleckner (Fleckner), and his paralegal John Benjamin (Benjamin), all of which claim that the September 17, 2004 letter was sent. See Notice of Motion, Shanker, Fleckner and Benjamin Affidavits.
Penn-America has presented affidavits and deposition testimony from claims adjusters Audrey Burkard (Burkard) and Jennifer O'Neill (O'Neill), claims examiner William Bennett (Bennett), IT manager Jay Karabin (Karabin) and mailroom manager Delbert Hinkle (Hinkle), all of which claim that Penn-America never received the September 17, 2004 letter; that, if Penn-America had received the letter, it would have been electronically scanned and retained; and that Penn-America's electronic records, which include all of the other correspondence relating to Cifuentes, do not include a copy of the letter. See Notice of Cross Motion, Verveniotis Affirmation, ¶¶ 29-31; Exhibit O; Bennett Affidavit, Karabin Affidavit; Hinkle Affidavit. Penn-America also asserts that it did not receive any notice of the underlying action until May 24, 2005, when it was served with a copy of the notice of default judgment against AM. Id.; Bennett Affidavit, ¶ 21.
Penn-America disclaimed insurance coverage of AM due to late notification of the underlying action in a letter dated September 21, 2004. Id.; Verveniotis Affirmation, ¶ 3; Bennett Affidavit, Exhibits H, K. Cifuentes then commenced this action on or about August 18, 2005 by filing a summons and complaint that set forth one cause of action for a declaratory judgment that Penn-America is obligated to indemnify AM and to pay Cifuentes the judgment amount that she was awarded against AM. See Notice of Motion, Exhibit J. Penn-America served an answer on October 9, 2005. Id. Cifuentes now moves to seal the file of this action, and for summary judgment on the complaint, while Penn-America cross-moves for summary judgment to dismiss the complaint (motion sequence number 012).
DISCUSSION
As previously mentioned, the first branch of Cifuentes's motion seeks an order, pursuant to the Uniform Rules for Trial Courts ( 22 NYCRR § 216.1), to seal the file of this action. That statute provides that:
(a) Except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as of the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and opportunity to be heard.
Penn-America does not appear to oppose this branch of Cifuentes's motion. Cifuentes states that her request to seal this file resulted from an application that Penn-America made to Special Referee Crespo at some point earlier in this proceeding. See Levine Reply Affirmation, at 10. However, Cifuentes does not identify what that application was, does not state whether or not it was granted, and, most importantly, does not advance any argument as to what "good cause" may exist to support her request to seal the record of this action. In the absence of any evidence or argument, the statute does not permit the court to grant Cifuentes's request, as there has been no showing of good cause. Accordingly, the first branch of Cifuentes's motion is denied.
The second branch of Cifuentes's motion seeks summary judgment on the complaint, while Penn-America's cross motion seeks summary judgment to dismiss the complaint. When seeking summary judgment, the moving party bears the burden of proving, by competent, admissible evidence, that no material and triable issues of fact exist. See Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 (1985); Sokolow, Dunaud, Mercadier Carreras LLP v Lacher, 299 AD2d 64 (1st Dept 2002). Once this showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact which requires a trial of the action. See Zuckerman v City of New York, 49 NY2d 557 (1980); Pemberton v New York City Tr. Auth., 304 AD2d 340 (1st Dept 2003). Here, Cifuentes satisfied her burden of proof; Penn-America has not.
Cifuentes's sole cause of action seeks a declaratory judgment that, pursuant to the AM insurance policy, Penn-America is obligated to indemnify AM for the amount of the judgment that she was awarded against AM. See Notice of Motion, Exhibit J. Declaratory judgment is a discretionary remedy which may be granted "as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." CPLR 3001; see e.g. Jenkins v State of NY, Div. of Hous. and Community Renewal, 264 AD2d 681 (1st Dept 1999). Here, Cifuentes argues that she is entitled to the proposed declaration because she has complied with all of the requirements set forth in the AM insurance policy, while Penn-America denies this, and requests a declaration that Cifuentes has not satisfied that contract's notice requirements. Thus, both parties are requesting that the court declare their rights under the terms of the AM insurance policy. In this situation, it is proper for the court to consider the competing applications for declaratory relief. It is well settled that "on a motion for summary judgment, the construction of an unambiguous contract is a question of law for the court to pass on, and . . . circumstances extrinsic to the agreement or varying interpretations of the contract provisions will not be considered, where . . . the intention of the parties can be gathered from the instrument itself.'" Maysek Moran v Warburg Co., 284 AD2d 203, 204 (1st Dept 2001), quoting Lake Constr. Dev. Corp. v City of New York, 211 AD2d 514, 515 (1st Dept 1995).
Cifuentes first argues that the notice provision of the AM insurance policy merely requires a claimant to provide the insurer with notice of either the filing of a claim or of the commencement of a legal action, but not both. See Notice of Motion, Levine Affirmation, at 6-9. Penn-America responds that the plain language of the notice provision requires a claimant to provide three types of notice in order to trigger liability coverage: 1) notice of an "occurrence;" 2) notice of the intent to pursue a claim; and 3) notice of the commencement of a "suit." See Memorandum of Law in Support of Cross Motion, at 10. The court agrees.
Section IV of the AM insurance policy plainly states that:
2 a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim.
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2 b. You must see to it that we receive written notice of the claim or "suit" as soon as practicable.
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2 c. You and any other involved insured must . . . [i]mmediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit". . . .
See Notice of Motion, Exhibit H at 4-5. It is clear that the word "or" in subparagraph 2 b does not operate to give the claimant a choice as to which situation to provide notice in. The only reasonable reading of that provision is that it requires a claimant to provide notice to the insurer in whichever of the two situations might arise. Cifuentes's proposed reading of the AM insurance policy's notice provision is untenable because it twists the plain language of the contract. Therefore, the court rejects Cifuentes's first argument.
Cifuentes next argues that she has, in fact, served all three types of notice on Penn-America so as to trigger liability coverage under the AM insurance policy. See Notice of Motion, Levine Affirmation, at 9-15. Penn-America responds that, while Cifuentes's attorneys admittedly did serve Penn-America with a copy of the incident report relating to her injury and with a notice of claim, they did not serve Penn-America with any notice that she had commenced the underlying action. See Notice of Cross Motion, Bennett Affidavit, ¶¶ 11-14; Exhibits B, C, D, E. Cifuentes states that her attorneys did mail Penn-America notice of the commencement of the underlying action on September 17, 2004, and relies on the Court of Appeals' decisions in Bossuk v Steinberg ( 58 NY2d 916, 919) and Nassau Ins. Co. v Murray ( 46 NY2d 828, 829) that recognize a presumption that notice has been delivered where there is "proof of an office practice and procedure, followed in the regular course of business, which shows that notices have been duly addressed and mailed." See Notice of Motion, Levine Affirmation, at 9; Exhibit G. Cifuentes then offers the affidavits of Shanker, Fleckner and Benjamin as proof that her attorneys' law office did adhere to such a practice of mailing procedure during the regular course of its business. Id. at 9-12; Shanker, Fleckner and Benjamin Affidavits. Penn-America responds that, under New York State law, the presumption of delivery may be rebutted, and an issue of fact established, where the party claimed to have been served with notice submits a sworn affidavit of non-receipt that sets forth specific facts to rebut the statements in the serving party's affidavit. See Memorandum of Law in Support of Cross Motion, at 16-20.
Penn-America then offers the deposition testimony and affidavits of Burkard, O'Neill, Bennett, Karabin and Hinkle that all swear to the non-receipt of Cifuentes's September 17, 2004 letter, and describe in detail the operation of Penn-America's mail and electronic database systems, and the searches thereof that found no letter, but did find all of the other correspondence pertaining to Cifuentes. See Notice of Cross Motion, Verveniotis Affirmation, ¶¶ 29-31; Exhibit O; Bennett Affidavit, Karabin Affidavit; Hinkle Affidavit. Cifuentes replies that Burkard, the claims investigator originally assigned to her case, was habitually unresponsive and unhelpful to Fleckner, her primary attorney, and presents Burkard's personnel file to show that she was eventually fired by Penn-America for negligence about her job duties. See Notice of Motion, Levine Affirmation, at 10, 12-15; Fleckner Affidavit; Exhibit K. Penn-America replies that the evidence regarding the mailing practices at Cifuentes's attorney's office is unreliable, because it shows that Benjamin, a paralegal, purportedly mailed the September 17, 2004 letter, and that this is a departure from the allegedly normal practice of having an attorney be responsible for all official correspondence. See Memorandum of Law in Support of Cross Motion, at 6.
The court notes that Penn-America's reading of New York State law is correct. As the Appellate Division, Second Department, noted in Electronic Servs. Intern. v Silvers ( 233 AD2d 361, 362 [2d Dept 1996]), the presumption of delivery can be "overcome by . . . [a] forceful denial of receipt . . . [that] consists of affidavits from employees of the insurer and its agent, describing . . . the strict procedures followed by them in the handling of claims submitted by insurance agents . . . which have been formulated to ensure that each claim is properly recorded, delivered and acknowledged." See also Johnson v Deas , 32 AD3d 253 (1st Dept 2006). Here, Cifuentes has presented evidence to raise the presumption of delivery, and Penn-America has presented evidence sufficient to overcome the presumption of delivery. Thus, the court must reject Cifuentes's argument that she is entitled to the benefit of that presumption. However, this does not mean that Cifuentes is foreclosed from attempting to prove that the September 17, 2004 letter was in fact delivered. Both parties have called into question the reliability of their opponent's witnesses; Cifuentes asserting that Burkard should not be believed and Penn-America asserting that Benjamin should not be believed . It is axiomatic that issues of witness credibility are not appropriately resolved on a motion for summary judgment. See Santos v Temco Serv. Indus., 295 AD2d 218 (1st Dept 2002). Therefore, both parties would be entitled to an opportunity to have a hearing on the issue of delivery or non-delivery of the September 17, 2004 letter; however, based upon the undisputed facts of this case, as discussed below, such a hearing is not necessary.
Finally, Cifuentes argues that pursuant to the Appellate Division, First Department's, holding in American Transit Ins. Co. v B.O. Astra Mgt. Corp. ( 39 AD3d 432 [1st Dept 2007]), her alleged failure to timely serve Penn-America with notice of the underlying action is excusable, and would not afford Penn-America a ground to disclaim coverage, unless Penn-America could demonstrate "prejudice" caused by the late notice. See Notice of Motion, Levine Affirmation, at 6, 15-18. In its memorandum of law, Penn-America responds that "the breach of the condition precedent [i.e., non-delivery of notice of commencement of the underlying action] and the prejudice that resulted are clear and obvious." See Memorandum of Law in Support of Cross Motion, at 11. However, nowhere else in the memorandum or in its reply papers does Penn-America explain how it was prejudiced. Thus, Penn-America relies solely upon its attorney's conclusory statement as proof of prejudice. It is axiomatic that "[a]verments merely stating conclusions, of fact or of law, are insufficient' to defeat summary judgment.'" Banco Popular N. Am. v Victory Taxi Mgt. , 1 NY3d 381 , 383 (2004) (citation omitted). One might suppose that the "prejudice" here (if any) consisted of Penn-America losing the opportunity to defend an action that resulted in a default judgment against its client, AM. However, the court is unwilling to characterize this as "prejudicial," per se, since, in this case, Penn-America admits that Cifuentes promptly served it with notice of the default judgment in the underlying action, which would have afforded Penn-America sufficient opportunity to either move to vacate the default. Therefore, even if Cifuentes in fact failed to provide Penn-America with notice of the commencement of the underlying action, that failure was not prejudicial to Penn-America, and does not afford Penn-America grounds to disclaim coverage or to avoid its contractual obligation to indemnify AM, against the judgment that Cifuentes was awarded against AM in the underlying action. Accordingly, Cifuentes has established that she is entitled to the declaratory judgment that sought in this case, and therefore her motion for summary judgment is granted.
Penn-America's cross motion seeks summary judgment to dismiss the complaint. For the reasons discussed above, Penn-America's motion is denied. Significantly, Penn-America's failure to establish prejudice, as a result of Cifuentes's alleged non-delivery of the September 17, 2004 letter, is sufficient ground upon which to award Cifuentes summary judgment; Penn-America's failure is also fatal to Penn-America's arguments raised herein. Accordingly, Penn-America's cross motion is denied.
DECISION
ACCORDINGLY, for the foregoing reasons it is hereby
ORDERED that the motion, pursuant to CPLR 3212 and 22 NYCRR § 216.1, of plaintiff Karina Cifuentes is granted solely to the extent that said plaintiff is awarded summary judgment on her sole cause of action for a declaratory judgment, but is denied as regards her request to seal the file of this action, and it is further
ADJUDGED AND DECLARED that defendant Penn-America Group, Inc. is obligated to indemnify its client, non-party AM Fitness Management, Inc. d/b/a Dolphin Fitness Clubs International, Inc., and to satisfy the judgment that plaintiff Karina Cifuentes was awarded against that non-party in the action that bore Index Number 113445/04, and was encaptioned "Karina Cifuentes v Dolphin Fitness Clubs International, Inc. and AM Fitness Management, Inc.;" and it is further
ORDERED that the cross motion, pursuant to CPLR 3212, of defendant Penn-America Group, Inc. is denied; and it is further
ORDERED that within 30 days of entry of this order, plaintiff shall serve a copy upon defendant, with notice of entry.