Opinion
25687/2014E
05-15-2018
GLOBAL ENERGY EFFICIENCY HOLDINGS, INC. and Manufacturers and Traders Trust Co., Plaintiffs, v. WILLIAM PENN LIFE INSURANCE COMPANY OF NEW YORK, Defendant.
Counsel for Plaintiffs: Trief & Olk (Shelly L. Friedland, Esq.) Counsel for Defendant: Bleakley Platt & Schmidt, LLP (Robert D. Meade, Esq.) Counsel for Virginia Read: Cittone & Chinta, LLP (Francelina M. Perdomo, Esq.)
Counsel for Plaintiffs: Trief & Olk (Shelly L. Friedland, Esq.)
Counsel for Defendant: Bleakley Platt & Schmidt, LLP (Robert D. Meade, Esq.)
Counsel for Virginia Read: Cittone & Chinta, LLP (Francelina M. Perdomo, Esq.)
Mary Ann Brigantti, J.
The following papers numbered 1 to 10 read on the below motion noticed on December 18, 2017 and duly submitted on the Part IA15 Motion calendar of January 22, 2018 :
Papers Submitted/Numbered
Pls.' Notice of Motion, Exhibits, 1,2
Def.'s Aff. in Opp., Exhibits, Memo. of Law, 3,4,5
Read Affirmation 6
Pls.' Supp. Aff. 7
Pls.' Reply Aff., Exhibits 8,9
Oral Argument Transcript 10
Upon the foregoing papers by way of order to show cause, the plaintiffs Global Energy Efficiency Holdings, Inc. ("Global") and Manufacturers and Traders Trust Company (collectively, "Plaintiffs") move for an order (1) granting Plaintiffs' motion for summary judgment against defendant William Penn Life Insurance Company of New York ("Defendant"), (2) awarding Plaintiffs judgment against Defendant in the amount of $2,000,000 representing the proceeds of insurance policy 564410 issued by Defendant on the life of Jhonny Jaar ("Decedent"), and $1,000,000 representing the proceeds of insurance policy 582416 issued by Defendant on the life of Decedent, together with interest on the proceeds of both policies in the amount of 3% from January 3, 2014, the date of Decedent's death; (3) dismissing Defendant's affirmative defenses and counterclaims, and (4) for such other and further relief as this Court deems just and proper. Defendant opposes the motion. Counterclaim defendant Virginia Read, Individually and as Administratrix of the Estate of Johnny Jaar, a/k/a Jhonny Jaar (hereinafter, "Read") submits an affirmation in response to the motion.
In 2011 and 2012, plaintiff Global sought to obtain two life insurance policies from Defendant to insure the life of Decedent, one of Global's founders and its Chief Technology Officer at the time. Decedent's application for the first policy was submitted in two parts dated December 20, 2011 and January 11, 2012. On April 15, 2012, Defendant issued the first policy (number 564410) insuring Decedent's life in the face amount of $2,000,000. On December 21, 2012, Decedent applied for a second insurance policy. On January 16, 2013, Defendant issued the second policy (number 582416) insuring Decedent's life in the face amount of $1,000,000. Both of these polices were issued to Decedent under Defendant's "standard plus non-tobacco rating." On each of his applications, Decedent denied using tobacco during his lifetime, and also denied the use of marijuana or other illegal drugs. On January 3, 2014, Decedent passed away. Global then submitted a claim under both policies and assigned the polices to co-plaintiff Manufacturers and Traders Trust Company. In August 2014, Defendant issued an underwriting opinion denying Plaintiff's claim on the grounds that Decedent made material misrepresentations during the application process. Plaintiffs thereafter commenced this action.
Decedent passed away in his residence on January 3, 2014 at the age of 49. The autopsy report and death certificate disclosed the immediate cause of death as "atherosclerotic cardiovascular disease" and listed a contributing factor as "an acute mixed drug intoxication of ketamine and methylenedioxymethamphetamine"—commonly known as MDMA or ecstasy. Decedent's wife, Read, allegedly told police officers that her husband was a "chronic marijuana smoker" and "she thinks he took ecstasy and possible ketamine or a ‘molly’ last night." Read testified that she first discovered marijuana and ecstasy in her home in August 2013. She did not know, however, how long or how frequently her husband was using drugs and she never asked him that question. She further stated that she never saw her husband smoke tobacco products.
Steve Kotoros ("Kotoros"), a claims consultant working on behalf of the Defendant in connection with this claim, interviewed Read in person on February 8, 2014. At that time, she indicated that her husband "has never used alcohol or drugs on a regular basis, or has ever sought treatment for or been advised to seek treatment for any problems relating to the use of drugs or alcohol." After obtaining Decedent's autopsy and records from the medical examiner's office indicating the cause of death, Defendant directed Kotoros to interview Read a second time. In an August 2014 report, Kotoros wrote that, this time, Read told him that her husband "started using marijuana about three years ago, most evenings, using it when he was with friends about once every 2–3 months. She stated that she found out about the ketamine about 1–2 years ago and told him to stop about a year ago. She did not know the frequency of his use of this drug and thought he had stopped until it came to her attention around December 2013 that he was still using ketamine. She could not be more specific with time frames." Read, at her own deposition, denied giving Kotoros the above information at the second interview.
During prior motion practice, Plaintiffs provided medical records from Decedent's physician Dr. Jose Cortes dated February and March 2013. The February 19, 2013 record contained a handwritten "+smoke" or "plus smoke" notation in the margin. When asked about this notation at his deposition, Dr. Cortes testified that this indicated that the patient either had a history of smoking or was currently smoking, but he could not say for sure. The records also indicated that Dr. Cortes discussed "smoking cessation" with Decedent, however Dr. Cortes explained that he discussed smoking cessation with all patients and this did not necessarily mean that Decedent was currently smoking.
In May 2016 Plaintiffs moved for summary judgment, alleging, inter alia , that there was no competent evidence that Decedent made any material misrepresentation in his insurance policy applications. Plaintiffs conceded that Decedent's use of tobacco (aside from a monthly "celebratory cigar"), marijuana or drug use during the 12 months immediately preceding his life insurance applications would constitute a "material misrepresentation." However, Plaintiffs alleged that the legally cognizable evidence only established that Decedent's marijuana and other drug use did not commence until after the insurance polices were issued. Defendant opposed the motion alleging, inter alia , that the statements from Read (a future counterclaim defendant) to Kotoros constituted admissions against interest that could bind Plaintiffs, since Read claimed an interest in the policy proceeds and has voluntarily agreed to become a party to this case. Defendant further claimed that the records from Dr. Cortes raised issues of fact as to whether Decedent was smoking tobacco or marijuana at the time of the exam, which occurred while the second policy was being underwritten and less than one year after the first policy was issued. Defendant also argued that summary judgment could not be granted here because there was outstanding discovery that has yet to be completed—specifically, the production of tissue slides from Decedent's autopsy for analysis by Defendant's medical expert, Dr. Michael Baden.
By Decision and Order dated September 12, 2016, this Court denied Plaintiffs' motion without prejudice. The Court found that statements attributed to Read in the Korotos report were inadmissible hearsay because (1) the Kotoros report was not admissible as a business record, and (2) even if Read were added as a party, and even if the statement constituted an "admission against interest," it would only be admissible if offered against herself, the party/declarant. The statement would not be admissible against Plaintiffs, who are co-parties. This Court also found that the statements attributed to Read as found in the autopsy report—that her husband was a "chronic marijuana user," was inadmissible hearsay and that the report did not fall into the business records exception. Furthermore, the statement that Decedent was a "chronic marijuana user" was not probative of whether Decedent used marijuana or other drugs within 12 months of his life insurance applications completed in December 2011 and December 2012. The Court also noted that the records from Dr. Cortes, at best, constituted very tenuous evidence that Decedent may have been smoking at or around the time of those February 2013 medical examinations. The Court found that it would be speculative to presume that these records, alone, raised triable issues of fact as to Decedent's tobacco or drug use during the relevant time frame.
Finally, the Court noted that after Plaintiffs' motion was fully submitted, Defendant's pending motion to strike the note of issue was denied but the Presiding Justice of the discovery part had granted Defendant's motion for leave to serve a "so-ordered" subpoena on Read so that Defendant's medical expert could obtain and review tissue slides that were made at Decedent's autopsy. Defendant's expert, Dr. Baden, explained that his review of liver tissue, certain changes of the heart, and skin tissue could provide information concerning how long Decedent had been using drugs. Since Defendant had demonstrated that relevant discovery remained outstanding, this Court denied Plaintiffs' motion without prejudice, and with leave to renew upon completion of the court-ordered discovery.
Since that order was entered, the parties completed the aforementioned discovery and Dr. Baden was deposed. Plaintiffs now renew their motion for summary judgment, alleging that Dr. Baden's testimony and the record in this case demonstrates that Defendant cannot raise an issue of fact as to whether Decedent made a material misrepresentation about his alleged tobacco or drug use at the time he filled out the insurance policy applications. Defendant opposes the motion.
First, as noted in the prior order, Plaintiffs carried their initial summary judgment burden by submitting documentary evidence establishing the existence of valid insurance polices at the time of decedent's death, and establishing that Plaintiffs were the sole beneficiaries entitled to the proceeds of the two policies (see A.F. Green & Co. v. William Penn Life Ins. Co. of New York , 220 AD2d 317 [1st Dept. 1995] ). Defendant, the party seeking rescission, thus bears the burden of submitting evidentiary proof in admissible form that the insured-applicant made a misrepresentation during the application process that would have resulted in a refusal to issue the policy (see CPLR 3105[b] ; see Tuminelli v. First Unum Life Ins. Co. , 232 AD2d 547 [2nd Dept. 1996] ; Zilkha v. Mutual Life Ins. Co. of New York , 287 AD2d 713 [2nd Dept. 2001] ; Raffaele v. United States Life Ins. Co. , 266 AD2d 100 [1st Dept. 1999] ; 128 Hester LLC v. New York Marine and General Ins. Co. , 126 AD3d 447 [1st Dept. 2015] ).
Defendant initially argues that since the prior motion was made, it commenced an action against Read as a counterclaim defendant. Read answered Defendant's pleading on December 7, 2016, asserting six cross-claims against Plaintiffs and one counterclaim against Defendant. Read claimed that she entered into an agreement on April 1, 2014 to accept $2,000,000 in settlement of her claim for the value of her husband's interest in Global if such a sum was recovered from Defendant in this litigation. Read further alleged that, consequently, Global's assignment of its interest in the policy proceeds to the co-plaintiff on August 15, 2014 was void. Read, by her cross-claims, seeks specific performance on a March 4, 2014 settlement agreement with Plaintiffs, asserts a cause of action against Plaintiffs sounding in breach of implied covenant of good faith and fair dealing and breach of shareholder agreement, and she seeks an accounting from Global of financial information required to properly value Decedent's interest in Global. Defendant notes that these claims are not contingent upon any recovery by Plaintiffs against Defendant. Read's sixth cross-claim seeks a declaratory judgment, inter alia , directing Defendant to pay the subject insurance policy proceeds to Decedent's estate. Defendant notes that on April 25, 2017, Read voluntarily discontinued her cross-claims. However, Defendant argues that this discontinuance was a nullity because it was not filed within 20 days of service, and Defendant did not stipulate to the discontinuance (citing CPLR 3217[a] ). Defendant argues that Read alleges to have a superior right and interest to the insurance proceeds, and this claim should preclude consideration of the present motion. Defendant asserts that even if the discontinuance was valid and Plaintiffs prevailed on this motion, Defendant would remain subject to Read's claims against Defendant for the same relief sought by Plaintiffs. Thus, Defendant alleges, "[t]he possibility of a double recovery and the absence of res judicata , if [Defendant] prevails on this motion, should bar any consideration of this motion" (Defendant's Memorandum of Law at Page 6).
In response to these contentions, Read's counsel has filed an affirmation formally seeking a voluntary discontinuance of her cross-claims against Plaintiffs pursuant to CPLR 3217(a). Read further asserts that she will no longer seek any relief against Defendant to recover the life insurance proceeds that are the subject of this action. Plaintiffs assert that Defendant's procedural arguments do not constitute a defense to this motion. Read's prior voluntary discontinuance of her cross-claims was valid because Plaintiffs and Read had stipulated to an extension of time to respond to the cross-claims through April 27, 2017. The discontinuance was filed on April 25 2017. In any event, Plaintiffs assert that Defendant waived any objection to the discontinuance. Plaintiffs also assert, among other things, that there is no possibility of double-recovery against Defendant since Read has withdrawn her claims against Defendant, and Read would be precluded from re-litigating her claims under the principles of res judicata, irrespective of whether Plaintiffs or Defendant prevailed here.
This Court agrees with Plaintiffs' arguments and finds that the Read cross-claims, and her allegedly defective discontinuance of same, do not bar the consideration of this motion. First, Read will be permitted to discontinue her cross-claims against Plaintiffs. According to CPLR 3217(b), "[a]fter the cause has been submitted to the court or jury to determine the facts, the court may not order an action discontinued except upon the stipulation of all parties appearing in the action." A motion for summary judgment does not constitute the submission of the case to the court for a determination of the facts (see O'Neill v. Pinkowski , 41 Misc 3d 621 [Sup. Ct., Essex Cty., 2013] ; 263 Siegel Practice Rev., 4 [Nov. 2013] ). Courts are generally reluctant to compel a party to litigate and, in the exercise of discretion, will grant a motion for discontinuance absent compelling circumstances or particular prejudice to defendants ( Tucker v. Tucker , 55 NY2d 378 [1983] ); see also, Matter of Baby Boy C. , 84 NY2d 91, 99 [1994] ). No such compelling circumstances or prejudice to Defendant exists her should Read be permitted to discontinue her cross-claims. Furthermore, contrary to Defendant's contentions, the existence of those cross-claims did not constitute an impediment to consideration of Plaintiffs' motion. The principles of res judicata would preclude Read from re-litigating any purported claim for recovery of the insurance proceeds from Defendant. Read had a full and fair opportunity to assert such claims in this litigation. The doctrine of res judicata applies not only to claims actually litigated, but also to claims that could have been raised by the parties (see Nationwide Mut. Ins. Co. v. U.S. Underwriters Ins. Co. , 151 AD3d 504, 506 [1st Dept. 2017] ).
The Court therefore turns to the issue of whether there is sufficient evidence on this record to raise a triable issue of fact as to whether Decedent made a material misrepresentation during the life insurance application process. As noted in the prior order: "the parties agree that Decedent's use of tobacco [aside from a monthly "celebratory cigar"], marijuana or other recreational drugs within 12 months of his December 2011 application or December 2012 application would constitute a "material misrepresentation" for purposes of CPLR 3105[b] ). Thus the critical issue in this case is whether the record discloses admissible evidence to raise an issue of fact as to whether the decedent used tobacco, marijuana, or illegal drugs during the relevant time frame ( Zuckerman v. City of New York , 49 NY2d 557, 562 (1980)." (Decision and Order dated September 12, 2016 at p.7).
This Court previously concluded:
"...in opposing a motion for summary judgment, hearsay evidence may be used so long as it is not the only evidence submitted in opposition (see Rivera v. GT Acquisition 1 Corp. , 72 AD3d 525 [1st Dept. 2010] ; Chubb & Son v. Riverside Tower Parking Corp. , 267 AD2d 128 [1st Dept. 1999] ). While Defendant's evidence in opposition is mostly supported by hearsay, the non-hearsay evidence reveals that: (1) Decedent passed away with drugs in his system, (2) his wife found out about Decedent's drug and marijuana use approximately eight months after Decedent completed his second life insurance application alleging that he had no drug history—but she did not know when Decedent first began using marijuana or other drugs; and (3) one of Decedent's treating physicians at least referenced the decedent's smoking in his notations in a February 2013 visit. In light of the foregoing, and the fact that Defendant obtained a court order granting leave to obtain additional medical information, any outstanding issue must be conclusively examined and resolved before a finding is made in the Plaintiffs' favor as a matter of law." (Decision and Order, at p. 12).
Upon renewal of Plaintiffs' summary judgment motion, this Court makes the following findings:
(A) Dr. Michael Baden's Opinion Testimony
The Court first addresses the issue of whether the testimony of Dr. Baden is probative of whether Decedent was in fact a smoker during the relevant time frame—that being within 12 months of his December 2011 life insurance application or within 12 months of his December 2012 application. In order to render an admissible opinion, the expert must have "a degree of confidence in his conclusions sufficient to satisfy accepted standards of reliability," and the opinion cannot be based on guess or surmise ( Matott v. Ward , 48 NY2d 455, 459–60 [1979] ). This standard can be satisfied "by any formulation from which it can be said that the witness' ‘whole opinion’ reflects an acceptable level of certainty" (id. [internal quotations omitted] ). The rule that has evolved is whether it is "reasonably apparent" that "the doctor intends to signify a probability supported by some rational basis" ( id. , at 462 ).
This Court finds that Dr. Baden's opinion that Decedent was a "smoker" for an extended period of time is support by a rational basis and admissible on the issue of whether or not Decedent was a "smoker" at the time of his insurance policy applications. Dr. Baden reviewed, among other things, Decedent's autopsy report which contained a review of the respiratory system. The report stated in part, "[t]he visceral pleural surface covered with a moderate amount of anthracotic pigment" (Baden EBT at 54). Dr. Baden confirmed the veracity of a letter Defendant's counsel sent to Plaintiff's counsel (id. at 8), which stated in part that this black material, which can be produced by cigarette or marijuana smoking, was confirmed as being present throughout the lung tissue when examined under a microscope. Dr. Baden ultimately opined that based on his review of the materials in this case that Decedent "was a smoker" for "an extended period of time" (id. at 55–56). He stated that the microscopic findings, including "the distribution of the anthracosis in the lungs—in the lung tissue" and the "distribution of the carbonaceous material in the lungs" would take "many years" to develop (id. at 42; 56). He testified that although it was possible, it was "highly unlikely" that Decedent was not a smoker (id. at 37–38). Although Dr. Baden conceded that his opinion was not supported by a specific peer-reviewed articles, he stated that his opinion was based upon his substantial prior work experience with lung disease at Bellevue Hospital (id. at 47; 70–71).
Dr. Baden could not distinguish whether the microscopic findings indicated someone who was currently smoking as opposed to someone who had stopped smoking ten years earlier (id. at 36–37), and he could not state for precisely how long decedent had been smoking, aside for "some time" (id. ) and there was a possibility that Decedent was not a smoker (id. at 48–49). However, he did testify that the microscopic findings would take years to develop, and it was more likely than not that Decedent did not stop and then restart smoking (id. at 57). Courts have permitted similar language (e.g., possible and probable), to express a medical opinion if it is also supported by a rational basis (see McGrath v. Irving , 24 AD2d 236, 238 [3rd Dept. 1965], lv. den. , 17 NY2d 419 [1966] ). Dr. Baden also noted that the nicotine test performed by the insurance company would have only demonstrated that Decedent hadn't smoked for a few days prior to the test (id. at 57), and he also opined that the various medical articles presented to him at the deposition were essentially inapposite to these facts (Baden EBT at 45–46). In total, Dr. Baden's opinion testimony was sufficiently supported by the evidence on the record and reflected an acceptable level of certainty. While Dr. Baden relied in part on hearsay evidence—e.g., Ms. Read's statements to police found in the autopsy report—an expert may rely on hearsay information provided that it is the type of material commonly relied on in the profession and provided that it does not constitute the sole or principal basis for the expert opinion (see State v. Fox , 79 AD3d 1782, 1783 [4th Dept. 2010] ; Hinlicky v. Dreyfuss , 6 NY3d 636, 648 [2006] ). Here, Dr. Baden testified that in his experience that information provided by next-of-kin to police at the time of death is something that "has to be interpreted, together with after-coming information," and the autopsy report was not the sole basis of his opinion (see Baden EBT at 73–74). Furthermore, even assuming that Dr. Baden could not competently dispute the testimony of Dr. Cortes concerning Dr. Cortes' own medical notations, Dr. Baden did not entirely rely on those medical records and notations in rendering his opinion. Any other purported shortcomings in Dr. Baden's testimony noted by Plaintiffs merely go to the weight of Dr. Baden's opinion, rather than to its admissibility (see, e.g., Erbstein v. Savasatit , 274 AD2d 445, 446 [2nd Dept. 2000] ).
(B) Virginia Read's Statements to Defendant's Investigator Kotoros
As noted in prior motion practice, claims consultant Kotoros interviewed Read on behalf of Defendant on February 8, 2014. At that time, Read indicated that her husband "has never used alcohol or drugs on a regular basis, or has ever sought treatment for or been advised to seek treatment for any problems relating to the use of drugs or alcohol." Kotoros subsequently obtained Decedent's autopsy report and other records from the medical examiner's officer's office indicating, among other things, that a contributing factor for the death was "acute mixed drug intoxication" that included ketamine and MDMA. Defendant then directed Kotoros to question Ms. Read regarding her husband's use of these drugs. Defendant thereafter directed Kotoros to question Read again regarding her husband's use of these drugs. On August 12, 2014, Kotoros drafted a report documenting the phone-call follow-up interview wherein he advised Read that Defendant was aware of Decedent's drug use. The August 12, 2014 report states ..."[a]s we got deeper into the conversation Ms. Read said that her husband started using marijuana about three years ago, most evenings, using it when he was with friends about once every 2–3 months. She stated that she found out about the ketamine about 1–2 years ago and told him to stop about a year ago. She did not know the frequency of his use of this drug and thought he had stopped until it came to her attention around December 2013 that he was still using ketamine. She could not be more specific with time frames." Kotoros initially testified that he was unaware of the specific dates of drug use, and he said that such dates were not provided during the second interview. However, his recollection of the dates was refreshed when he was provided with the August 12, 2014 report. Read, at her own deposition, acknowledged that Kotoros had asked about Decedent's drug use and use of marijuana, but she denied telling Kotoros that Decedent began smoking three years before the date of the interview (Read EBT at 38). Instead, she testified that she told Kotoros that she "did not know the time" period concerning Decedent's marijuana use (id., see also p.44–45).
An issue raised on the prior motion was whether the purported "admission" from Read found in the August 12, 2014 report—that Decedent started using marijuana about three years prior to the date of the August 2014 interview—was admissible against Plaintiffs to raise an issue of fact as to whether Decedent made a material misrepresentation on the subject insurance policy applications. In support of the prior motion, Plaintiffs argued that second Kotoros report was inadmissible because it was hearsay, it did not qualify as a business record, it was a document created for the purposes of litigation, and it lacked any indicia of trustworthiness. Plaintiff noted that Kotoros did not have Read review or sign the second report to verify its accuracy, despite the fact that he normally did this with witnesses. Kotoros also did not independently recall the conversation with Read, and he was not able to confirm whether the time periods were measured from the date of death or the date of the interview. In addition, Read denied telling Kotoros that her husband first began using marijuana three years before, and she instead testified that she told him that she did not know when its use began. In opposition, Defendant argued inter alia that the statements made by Read to Kotoros would be admissible as an admission if Read was a party to the action, and furthermore, statements by a person sharing a joint or common interest with a party are admissible against that party. In reply, Plaintiffs argued in part that, contrary to Defendant's contentions, Read was not a party that there is no basis for a rescission claim against her, that she was neither the beneficiary of the policies nor the assignee, and she had no legal interest in the life insurance proceeds, and there was no reason for her to be a party. Plaintiffs further argued that even if she was joined as a party, a party admission cannot be used against a co-party. Plaintiffs also denied that they were relying on Read's testimony in support of their own claims.
This Court determined: "Defendant argues that Ms. Read's statements would be admissible as "admissions against interest" if she was a party to this action. However, even assuming that Ms. Read will be joined as a party, and assuming that her statement constituted an "admission against interest," the statement would only be admissible if offered against herself, the party/declarant. The statement is not admissible under this exception where, as here, it is being offered against Plaintiffs, who are co-parties (see Ellis v. Allstate Ins. Co. , 97 AD2d 970 [4th Dept. 1983], citing 4 Wigmore on Evidence [3d ed] § 1076; Richardson on Evidence [10th ed] § 232)." (September 12, 2016 Decision and Order at Page 9).
In opposition to the present motion, Defendant again contends that the Kotoros affidavit and statement that he allegedly obtained from Read constitutes an admission against interest that may be used against Plaintiffs. Defendant argues that admissions of a party may be used against a co-party that shares a common interest. Defendant notes that after the prior motion was submitted, Defendant asserted claims against Read as a counterclaim defendant, and Read thereafter answered the pleading and asserted cross-claims against Plaintiffs and Defendant, which she later voluntarily discontinued. At Read's examination before trial, it was noted by counsel that there was a "joint prosecution agreement" in effect between Plaintiffs and Read. Defendant further notes that as indicated in the first counterclaim, Read's right to collect settlement proceeds is contingent upon Plaintiffs' recovery of the insurance proceeds from Defendant.
In reply, with respect to this issue, Plaintiffs dismiss Defendant's contentions concerning the admissibility of Read's statements to Kotoros, asserting that this Court already rejected the admissibility of those statements.
This Court initially finds that it has the authority to revisit the issue of the admissibility of Read's statement to Kotoros notwithstanding the prior ruling, because "every court retains continuing jurisdiction to reconsider its prior interlocutory orders during the pendency of an action" ( Liss v. Trans. Auto Sys. , 68 NY2d 15, 20 [1986] ; Bayo v. 626 Sutter Ave. Assoc., LLC. , 106 AD3d 648, 650 [1st Dept. 2013] ). The "law of the case" doctrine is not implicated here because this Court is addressing its own ruling, not a ruling by another court of coordinate jurisdiction (see Kleinser v. Astarita , 61 AD3d 597, 598 [1st Dept. 2009] ).
In this matter, as previously determined, the August 2014 Kotoros report does not constitute a business record because Read had no business duty to report information to Defendant's investigator (see Hochhauser v. Electrical Ins. Co. , 46 AD3d 174, 183 [2nd Dept. 2007] ; CPLR 4518[a] ). Without the benefit of the business records exception, the August 2014 report and Kotoros affidavit concerning the statement "equate to impermissible hearsay unless an independent basis for their admission exists" (see Hochhauser v. Electrical Ins. Co. , 46 AD3d at 183 ).
Defendant argues as it did in the prior motion that Ms. Read's statements may be admissible as admissions against interest. This Court previously found that, even if Read was joined as a party and assuming that her statement constituted an "admission against interest," the statement would only be admissible if offered against herself, the party/declarant. The statement would not be admissible under this exception where it is being offered against Plaintiff, a co-party (citing Ellis v. Allstate Ins. Co. , 97 AD2d 970 [4th Dept. 1983], citing 4 Wigmore on Evidence [3d ed] § 1076; Richardson on Evidence [10th ed] § 232). However, "it is recognized that the statements of one person may be rendered admissible against another by virtue of the existence between them of joint or common interests of privity. A common interest exists, as a rule, between persons who act jointly or have joint rights or interests" (58 NY Jur. 2nd Evidence and Witnesses, § 311; Hayes v. Claessens , 234 NY 230 [1922] ; see also Price, Richardson on Evidence [12th Ed] § 8–231).
In this case, after the prior motion was fully submitted, Defendant brought formal claims against Read as a counterclaim defendant, and Read thereafter asserted cross-claims against both Plaintiffs and Defendant. Read thereafter voluntarily discontinued her cross-claims against Plaintiffs, and she presently alleges that she will no longer seek any relief against Defendant to recover the life insurance proceeds that are the subject of this action, and she does not object to summary judgment being granted in favor of Plaintiff. During Read's examination before trial, it was acknowledged that there was a "joint prosecution agreement" between Ms. Read and Plaintiff. It was further acknowledged that "the beneficiary of that policy is the corporation. The decedent had an 18 percent interest in the corporation, obviously there's a financial interest in it" (Read EBT at 22–25). It is therefore apparent that Plaintiffs and Read have joint interests in this litigation, thus Read's admission may be used against Plaintiffs (see generally NY Jur. 2nd Evidence and Witnesses, § 311). Read's alleged statement to Kotoros constitutes an admission against her interest, because the statement is inconsistent with her position at her examination before trial—that she did not know when Decedent began smoking marijuana (see generally Dlugosz v. Exchange Mut. Ins. Co. , 176 AD2d 1011 [3rd Dept. 1991] ). Read's alleged August 2014 statement to Kotoros, that Decedent began using marijuana "about three years ago, most evenings," would raise an issue of fact as to whether Decedent made a material misrepresentation on his December 2011 and December 2012 insurance policy applications. The weight of Read's denial that she gave the aforementioned statements to Kotoros is a matter for the trier of fact (In the Matter of Rhodes [Motor Vehicle Acc. Indem. Corp.–Biggs] , 203 AD2d 46, 47 [1st Dept. 1994] ; see Newman v. Vetrano , 283 AD2d 264, 265 [1st Dept. 2001] ). Both Read and Kotoros are available for cross-examination, and therefore a jury will be a full opportunity to assess their credibility.
* * * * *
The Court is mindful that, "[s]ummary judgment should be denied where there is any doubt, at least any significant doubt, whether there is a material, triable issue of fact" ( Phillips v. Kantor & Co. , 31 NY2d 307, 311 [1972] ). In this case, Decedent signed insurance policy applications in December 2011 and December 2012 affirming that he had never used tobacco or nicotine products in any form, and that he had never used restricted or controlled substance including marijuana. The parties have agreed that if there was evidence that Plaintiff in fact used tobacco or drugs within 12 months of the application dates, that would constitute a material misrepresentation thus voiding the policies. On January 3, 2014—approximately 13 months after signing the second insurance policy application—Decedent passed away at age 49 as a result of "atherosclerotic cardiovascular disease" with a "contributing cause of death" as "actue mixed drug intoxication of ketamine and methylenedioxymethamphetamine."
As noted in the prior order, the non-hearsay testimony revealed that (1) decedent passed away with illicit drugs in his system, (2) decedent's wife found out about decedent's drug and marijuana use in August 2013, approximately eight months after decedent completed his second life insurance application alleging that he had no drug history, and decedent's wife testified that she did not know when her husband began using drugs, and (3) one of Decedent's treating physicians, Dr. Cotes, references decedent's smoking in notations made at a February 2013 examination—only two months after decedent completed his second application. In reviewing the evidence presented in support of and opposition to this renewal motions, the Court further accepts as evidence (1) an alleged August 2014 statement made from decedent's wife to Defendant's investigator, asserting that decedent began using marijuana "about three years ago, most evenings" and found out about his ketamine use "1–2 years ago," and (2) Dr. Baden's opinion, based in part on his review of tissue slides, that the appearance of anthracotic pigment in the lungs indicated that Decedent had likely been a smoker for an extended period of time. Furthermore, Read acknowledged at her examination before trial that she initially told Defendant's investigator that Decedent never used drugs on a regular basis. Read only related information concerning Decedent's drug use at the follow up interview, after the investigator had obtained Decedent's autopsy report, thus raising issues as to her credibility. Upon review of the evidence as a whole, including the hearsay statements contained in the autopsy report ( Zimbler v. Resnick 72nd St. Assoc. , 79 AD3d 620 [1st Dept. 2010] [hearsay evidence may be considered along with admissible evidence in opposition to summary judgment motion] ), this Court finds that Defendant has sufficient raised an issue of fact as to whether decedent made a material misrepresentation on his insurance policy applications, and therefore Plaintiff's summary judgment motion is denied (see Peckman v. Mutual Life Ins. Co. Of New York , 125 AD2d 244, 247 [1st Dept. 1986] [underwriter affidavit and hearsay newspaper articles sufficient to raise an issue of fact as to whether life insurance applicant made material misrepresentation about his employment], citing Rock v. National Life Ins. Co. , 257 A.D. 1018 [3rd Dept. 1939] [whether insured gave wrong answers to questions as to his occupation in life insurance application, and as to the condition of his health, was for the jury to determine] ). Plaintiff stresses that there is abundance of evidence indicating that Decedent did not smoke or use drugs during the relevant time frame, including his statements made to Dr. Ronald St. Louis, a negative nicotine test, and testimony from friends and co-workers confirming that he did not smoke or use drugs. However, in focusing on the persuasiveness of their evidence, "[Plaintiffs] [are] asking this Court to engage in issue-determination rather than issue-finding" (see Garcia v. 1265 Morrison LLC. , 122 AD3d 512, 513 [1st Dept. 2014] ).
Accordingly, it is hereby
ORDERED, that Plaintiffs' motion for summary judgment and related relief is denied, and it is further,
ORDERED, that Read's cross-claims are deemed discontinued in accordance with CPLR 3217(b).
This constitutes the Decision and Order of this Court.