Opinion
3900/03.
Decided January 30, 2007.
Weg Meyers, P.C., Attorneys for Plaintiffs, New York, NY.
Voute, Lohrfink, Magro Collins, LLP, By: Laura K. Silverstein, Esq., Attorneys for Defendant, White Plains, NY.
Defendant insured plaintiffs for damage to their property and paid a portion of the damages that plaintiffs claimed as the result of a sewer backup. Thereafter, plaintiffs sued the tortfeasor, the Village of Larchmont, for additional damages as the result of it's negligence. Defendant, in turn, brought a subrogation action against the tortfeasor to recover the moneys it had paid to plaintiffs. The two actions were joined for trial. After a finding of liability, both parties settled with the tortfeasor.
Plaintiffs now seek to recover additional damages under the policy. Defendant moves for summary judgment on the basis that plaintiffs' settlement with the tortfeasor collaterally estops plaintiffs from pursuing further claims against it. Defendant also contends that the settlement prejudiced it's subrogation rights and that plaintiffs released defendant from further obligation when they executed a subrogation receipt.
Motion is denied.
The action at bar is not barred by the doctrine of collateral estoppel. Collateral estoppel requires an identify of issues and a full and fair opportunity to litigate the issues. Here, although the items of damages in this action and the action with the tortfeasor are similar, the causes of action and the measure of damages are different. The action here is for breach of contract and seeks to recover damages due under the policy of insurance for replacement cost. The action by plaintiffs against the tortfeasor, by contrast, was for negligence and, as to property damage, limited to recovery for diminution of market value or the cost of restoration, whichever was less ( Fisher v. Qualico Contracting Corp., 284 AD2d 495). Assuming the cost of replacement is higher, as plaintiffs allege, they could not have recovered their full damages in the action with the tortfeasor.
Plaintiffs' settlement did not prejudice defendant's subrogation claim for the moneys paid plaintiff under the policy as defendant settled it's subrogation claim with the tortfeasor. Moreover, an insured does not prejudice the subrogation rights of the insurer by settling with the wrongdoer in alleged violation of a policy provision requiring the insurer's consent to any such settlement, where the insurer has repudiated liability for further benefits under the policy, thereby releasing the insured from the consent requirement of the policy ( Meier v. Valley Forge Insurance Co., 226 AD2d 687; Matter of Automobile Insurance Co. of Hartford Connecticut v. Stillway, 165 AD2d 572).
In this case, defendant denied plaintiffs' claim for additional damages under the policy. As a result, plaintiffs were free to settle their action with the tortfeasor without defendant's consent. Plaintiffs' recovery in the tort action, of course, will have to be offset against any additional sums that plaintiffs may be due under the policy.
Plaintiffs concede this point in their Memorandum at p. 12, wherein it states: "Indeed, Plaintiffs' recovery of $550,000 against the Village of Larchmont will be used to offset the total amount recoverable against Pacific in the instant action."
As to the Subrogation Receipt, while it does state that the monies paid were in "full settlement of all claims and demands" for the sewer backup, the subrogation receipt must be read in conjunction with the Proof of Loss statement executed simultaneously therewith. The Proof of Loss expressly noted on line 7 as to "Whole Loss and Damage" that there was "conditional language". Schedule B which listed the "Loss and Damage" stated the "Settlement Recap" was only "to date".
The insurance adjuster also acknowledged under Schedule C "Apportionment" that there was no agreement that the damages listed were "final". The last section "Receipt for Payment" states that the "satisfaction and indemnity" of claims were "as above noted". The subrogation receipt itself contains limiting language that the right of subrogation is only to the "extent the insurance company has paid for same."
Viewed in totality, and considering the narrow purpose of the Subrogation Receipt, it is clear that the parties only intended to settle the claim at that time as reflected in the proof of loss. Certainly, if it was defendant's intention to secure a release for any and all claims that might be brought, it should have been unequivocally stated. Clearly, plaintiff did not intend to give such a release and one should not be implied under the circumstances.
Counsel shall appear for a Trial Readiness Conference at the Courthouse, rm 1200, on March 28, 2007 at 9:30 a.m. All discovery shall be finished by that date.