Summary
In Star and Strand, the court rejected a reading of CPLR 503(c) in which a foreign insurer could select any county where it has an office as an appropriate place for venue.
Summary of this case from Consol. Rest. Operations v. Westport Ins. Corp.Opinion
904786-19
09-26-2019
GEICO a/s/o Sharon Dye, Plaintiff, v. STAR AND STRAND TRANSPORTATION, INC., and Patrick Coons, Defendants.
Law Office of Bryan M. Kulak, By: Christen Ferrara, Esq., Attorneys for Plaintiff, 90 Crystal Run Road, Suite 490, Middletown, NY 10941 Boeggeman, Corde, Ondrovic & Hurley, P.C., By: Richard G. Corde, Esq., Attorneys for Defendants, 3 Barker Ave., 4th Floor, White Plains, New York 10601
Law Office of Bryan M. Kulak, By: Christen Ferrara, Esq., Attorneys for Plaintiff, 90 Crystal Run Road, Suite 490, Middletown, NY 10941
Boeggeman, Corde, Ondrovic & Hurley, P.C., By: Richard G. Corde, Esq., Attorneys for Defendants, 3 Barker Ave., 4th Floor, White Plains, New York 10601
David A. Weinstein, J.
The matter now before me arises out of an automobile accident that took place on June 8, 2016 in the City of Albany, Albany County, involving a vehicle driven by defendant Patrick Coons and one driven by Sharon Dye, the subrogor of plaintiff GEICO. Coons' automobile was owned by defendant Star and Strand Transportation, Inc. ("Star"). The complaint alleges that Dye sustained property damage of $7,168.10, and GEICO incurred rental costs of $1,450 as a result of the accident (Complaint ¶¶ 15-16). Plaintiff seeks to recover these costs (a total of $8,618.10) in this subrogation action.
The complaint avers that Dye is a resident of Albany County, and Coons is a resident of Nassau County (Complaint ¶¶ 2, 5). The pleading does not identify a principal place of business for Star, but lists its address as Troy, NY, in Rensselaer County, which is also listed as its principal place of business in the affirmation of defendants' counsel (see Defendants' Attorney Affirmation ["Def Aff"] ¶ 4).
A police report presented by defendants on this motion, and the affirmation of defendants' counsel, indicate that this is an error: both state that Coons is a resident of the Town of Nassau, which is in Rensselaer County (Aff in Supp ¶ 4 & Ex D).
In its complaint, GEICO placed venue in Orange County, stating as the basis for such that it is "Plaintiff's place of business." Defendant filed an answer, listing improper venue among its defenses. It subsequently served a Demand for Change of Venue dated July 22, 2019, seeking to have this case heard in the County of Albany. The present motion seeking such a change of venue followed.
Defendants make their motion pursuant to CPLR 511, on the ground that venue was improperly placed in Orange County in the first instance, and alternatively under CPLR 510, on the ground that the convenience of the witnesses would be served by the transfer. Since I grant the motion on the first ground, I need not address the second.
The notice of motion cites CPLR 501, which governs contractual venue provisions, and has no apparent relevance to this motion. As the supporting documents make clear, this is a typo, and the proper reference is to CPLR 510.
CPLR 509 provides that "the place of trial of an action shall be in the county designated by the plaintiff, unless the place of trial is changed to another county by order upon motion, or by consent ...." Here, plaintiff premises its placement of venue in Orange County on CPLR 503. CPLR 503(a) states:
"Except where otherwise prescribed by law, the place of trial shall be in the county in which one of the parties resided when it was commenced; the county in which a substantial part of the events or omissions giving rise to the claim occurred; or, if none of the parties then resided in the state, in any county designated by the plaintiff. A party resident in more than one county shall be deemed a resident of each such county."
The statute further provides that a corporation "shall be deemed a resident of the county in which its principal office is located" ( CPLR 503[c] ). As a general rule, foreign corporations doing business in New York must designate ‘[t]he county within this state in which its office is to be located" ( Business Corporation Law ["BCL"] § 1304[a][5] ), and the "principal office" for purposes of venue has generally been deemed to be the one designated under the BCL (see American Builders & Contractors Supply Co., Inc. v. Capitaland Home Imp. Showroom, LLC , 128 A.D.3d 870, 871, 11 N.Y.S.3d 80 [2d Dept. 2015] ["[f]or purposes of venue, the sole residence of a foreign corporation is the county in which its principal office is located, as designated in its application for authority to conduct business filed with the State of New York ..., regardless of where it transacts business or maintains its actual principal office"] [citing numerous cases]; see also Janis v. Janson Supermarkets LLC , 161 A.D.3d 480, 73 N.Y.S.3d 419 [1st Dept. 2018] [designation under BCL controlling, even if corporation does not have an office in that county] ).
Plaintiff notes that as a foreign insurer, it is exempt from the BCL designation requirement. For this proposition it points to Insurance Law § 1102(d), a statute which while it makes no reference to the BCL provision, allows the Superintendent of Financial Services to issue a license to an out-of-state insurer to do business in this State upon submission of certain information, including the location of the corporation's home office, but not including the New York county where its principal office is to be located.
Geico argues that since an out-of-state insurer is not required to designate a county where its office is located, it may select any county where it has an office as an appropriate place for venue under CPLR 503. There is a line of trial court authority which lends support to this view (see State Farm Ins. Co. v. Brother Transp., Inc. , 15 Misc. 3d 1110[A], 2007 WL 879851 [Sup. Ct., Nassau Cty. Feb. 15, 2007] ; Pennsylvania Mfrs. Ass'n Ins. Co. v. Liberty Mut. Ins. Co. , 2006 WL 1112961 [Sup. Ct., Westchester Cty. Apr. 26, 2006], citing General Acc. Fire & Life Assur. Corp. v. Allcity Ins. Co. , 53 Misc. 2d 596, 279 N.Y.S.2d 422 [Sup. Ct., Nassau Cty. 1967] ).
As stated in State Farm Ins. Co. , the rationale for these rulings is that "allowing a foreign insurance company residence in any county where they maintain an office is consistent with CPLR § 503(a), which provides that a party residing in more than one county shall be deemed a resident of each such county" ( 15 Misc. 3d 1110[A], at *2 ). It does not follow, however, that this provision allows a court to rewrite the statute to expand the definition of "resident" under CPLR Article 5 in the first instance. But that is just what the interpretation proffered by Geico would do, by allowing a foreign insurance corporation to place venue not just at the location of its "principal office" as provided by the statutory text, but where any of its offices is located. Neither section 503(a) nor any other of the CPLR's venue provisions supports such a reading.
To the contrary, there are two alternative conclusions which may flow from the fact that foreign insurers need not register its principal office, neither of which are in conflict with the statute's language. First, it could be held that no "principal office" exists in this State, and the plaintiff must therefore select an alternative basis for venue. Indeed, the statute specifically contemplates that there may be a circumstance where none of the parties has a "residence" in the State (see CPLR 503[a] ). The second possibility is that where there is no BCL certification, some other understanding of the term "principal office" may be used (see Dubiac v. Travelers Ins. Corp., 121 Misc. 2d 1090, 469 N.Y.S.2d 541 [Sup. Ct., New York Cty. 1983] ["Nothing in the CPLR states that there is no principal office absent a designation" under the BCL; insurer's admission in pleadings as to county of principal office sufficed for purposes of CPLR 503(c) ] ). Indeed, a number of decisions have specifically identified a "principal office" of a foreign insurance corporation for purposes of placing venue (see HVT, Inc. v. Safeco Ins. Co. of America , 77 A.D.3d 255, 908 N.Y.S.2d 222 [2d Dept. 2010] [finding venue in county that insurer attested via affidavits was its "principal place of business"]; Providence Washington Ins. Co. v. Squier Corp. 31 A.D.2d 514, 294 N.Y.S.2d 835 [1st Dept. 1968] ["Since it appears that plaintiff [foreign insurer] maintains its principal office for the conduct of its business in this state in New York County, plaintiff had the right to designate this county as the place of trial"]; Mazzocki v. State Farm Fire & Cas. Co., 170 Misc. 2d 70, 71, 649 N.Y.S.2d 656 [Sup. Ct., N.Y. Cty. 1996] ["As a foreign insurer State Farm's principal office defines its residence for the purposes of the venue statutes"] ).
The fact that the principal office is not certified pursuant to the BCL does not prevent the Court from determining whether such an office exists. The very statute relied upon by plaintiff and the caselaw it cites — Ins Law § 1102 — explicitly contemplates that an insurer has such an office, as Ins Law § 1102(e)(1)(C) (with emphasis added) requires that the Superintendent will "[u]pon payment of the appropriate fees by such corporation, cause a copy of its declaration and charter, certified by him, to be filed and recorded in the office of the clerk of the county in which such corporation has its principal office. "
Indeed, the present defendant represented in Valley Psychological, P.C. v. Government Employees Ins. Co. , 95 A.D.3d 1546, 1548, 944 N.Y.S.2d 785 (3d Dept. 2012) that it had its principal place of business in this state, located in Nassau County. Nowhere in the present record does it claim, to the contrary, that Orange County is the location of its principal office. Absent any such representation, Orange County is not a proper basis for venue under the clear language of CPLR 503(c).
To read the statute the way in which plaintiff and would have me do would require that the court construct a new ground for venue — any county where a foreign insurer has an office — out of whole cloth and without any support in the language of the statute. Moreover, to do so would result in the peculiar outcome that foreign insurers — and only foreign insurers, among all corporations — may pick and choose venue among all of their offices in the State. This result would be based entirely the a "judge-made" rule that principal office is that which is designated under the BC — a rule not set forth in statute (see Vincent C. Alexander, Supplementary Practice Commentaries, CPLR 503:3), and which is subject to exceptions (see Lombardi Assoc. v. Champion Ambulette Serv. , 270 A.D.2d 775, 776, 704 N.Y.S.2d 370 [3d Dept. 2000] ). A review of the caselaw shows that the rule, which has a long history, is generally applied for the estoppel-like purpose of barring a corporation from claiming a principal place of business in one setting (certification under the BCL), and then selecting a different one when convenient for placing venue (see e.g. Rossie Iron-Works v. Westbrook , 13 N.Y.S. 141, 142 [1st Dept. 1891] ["The corporation had selected its place of residence [by stating such] in its certificate of incorporation ... [and i]t could not change this designation of residence, except in the manner prescribed by statute"] ). I see no reason to extract from this sensible principle that simply because it cannot be applied (and therefore has no relevance) to foreign insurers, such corporations are therefore entitled to a different and more favorable set of venue rules than other corporations.
Finally, I am not persuaded by the reasoning of the State Farm court that the adoption of the "place venue in any foreign insurer's office" rule "will not prejudice defendants, since they are still afforded the opportunity to challenge an unfair choice of venue, i.e., to insure an impartial trial or to accommodate the convenience of material witnesses" ( 15 Misc. 3d 1110[A], at *2 ). As that case notes — as does plaintiff's affirmation now before me — a motion to change venue requires a "detailed evidentiary showing," based on affidavits from non-party witnesses, specifically setting forth the inconvenience of the selected venue (see id. at *3 ). In short, the initial placement of venue has a significant impact on the ultimate outcome of any subsequent fight on this issue. Allowing an insurer to place venue anywhere it has an office gives it significant control over the location of the litigation, regardless of whether there is a subsequent challenge under CPLR 511. It is a level of control for which the statute nowhere provides.
In sum, defendant has demonstrated that Orange County is not a proper county to place venue for this suit. As a result, plaintiff has forfeited its right to select the venue (see Llorca v. Manzo , 254 A.D.2d 396, 397, 679 N.Y.S.2d 83 [2d Dept. 1998] ). The motion to change venue to Albany County, the county designated by defendants, must therefore be granted (see Capolino v. Goren , 155 A.D.3d 1414, 1416, 65 N.Y.S.3d 272 [3d Dept. 2017] ).
Accordingly, it is ORDERED, that the motion of defendants for a change of venue to Albany County is granted; and it is further
ORDERED that the Clerk of the Supreme Court of Orange County is directed to transfer the above-entitled action to the Clerk of the Supreme Court of Albany County forthwith.