Opinion
5:98-CV-1989
August 13, 2001
KRIS T. JACKSTADT, Esq., MURRY S. BROWER, Esq., for Plaintiff.
FRIEDMAN, HIRSCHEN, MILLER, COUGHLIN CAMPITO, P.C. JEFFREY M. MILLER, Esq., for Defendant.
MEMORANDUM-DECISION AND ORDER
INTRODUCTION
Plaintiff moves to hold defendant in contempt of court for failing to comply with the prior order of the Court granting summary judgment declaring that defendant is obligated to assume the defense and indemnification of plaintiff in an action entitled DeFiglio v. Halter.
COMPLAINT
The complaint herein states that defendant issued a policy of automobile insurance to Raymond M. Baker; that plaintiff, Baker's employer, was a beneficiary under the policy; that Baker was involved in an accident in which Joyce DeFiglio was injured; that DeFiglio sued Baker, plaintiff and others in an action entitled DeFiglio v. Halter, et al., Index No. 194004, in New York State Supreme Court; and that defendant wrongfully disclaimed coverage to plaintiff. In disclaiming, defendant relied on a policy provision excluding coverage for "[a]ny person for any occurrence arising out of the operation of an auto: a) repair shop; b) public garage or parking place; c) sales agency; or d) service or maintenance facility." Defendant argued that, due to the factual circumstances surrounding the accident and plaintiff's operations, the exclusion applied.
The complaint sought judgment declaring that:
a. Goldstein Enterprises, Inc. and/or Golden Ford, Inc. are an insured under the motor vehicle liability policy number 6631P530976 issued by the defendant Nationwide Mutual Insurance Company to Raymond M. Baker;
b. That the defendant Nationwide Mutual Insurance Company assume the defense and indemnification of Goldstein Enterprises, Inc. and/or Golden Ford, Inc. in the action of DeFiglio v. Halter, et al., Index number 194004 in the County of Rensselaer.
PRIOR MOTIONS
Plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment turned on the validity of defendant's disclaimer. The record on the motions included the transcripts of the depositions of Baker, Paul Gentner (Baker's direct supervisor at plaintiff) and Jeannette Anglin (a senior claims adjuster at defendant) concerning the nature of plaintiff's operations and the factual circumstances surrounding the accident. The Court's decision, filed May 3, 2000, considered the applicability of the exclusion and concluded:
Legal authority, the plain language of the policy and the facts and evidence before the Court mandate that the "automobile business exclusion" relied upon by Nationwide to disclaim coverage does not apply. As this is the sole basis for Nationwide's disclaimer, the Court grants plaintiff's motion for summary judgment and denies defendant's cross- motion for summary judgment.
It is undisputed that defendant has refused to assume the defense of the DeFiglio action on the ground that plaintiff was also insured by an automobile dealers' policy issued by Travelers Insurance Co. ("Travelers"), which, plaintiff contends, affords concurrent coverage.
MOTION FOR CONTEMPT
In support of the motion for contempt, plaintiff states: "When asked to accept tender of the defense or to pay for the defense Nationwide has refused. Its refusal is apparently based upon its notion that the issue of concurrent coverage was never addressed as between Travelers and Nationwide." Plaintiff contends that by failing to raise the question of concurrent coverage in its answer and in opposition to the summary judgment motion, defendant has waived it. Thus, plaintiff argues, the Court should hold defendant in contempt of court for its refusal to assume the defense in the DeFiglio action. In opposition to the motion for contempt, defendant urges that its papers submitted in connection with the summary judgment motion made "repeated, overt references to the existence of an Automobile Dealers' Policy" issued to plaintiff by Travelers and that this policy provides coverage for the DeFiglio action. Defendant requests that the Court deny plaintiff's motion for contempt and determine priority of coverage between the two policies.
DISCUSSION
Priority of coverage
The issue of the relative obligations of Travelers and defendant to defend and indemnify plaintiff in the DeFiglio action is not before this Court. Travelers is not a party to this action and no pleading herein raises the issue of Travelers' obligations. At no time did this Court, either explicitly or implicitly, render any determination concerning Travelers' obligations, nor, indeed, could it have properly done so on the pleadings before it. Nor could any conduct on the part of defendant in this lawsuit constitute a waiver of any claims defendant may have against Travelers.
Defendant is required by the order of this Court, filed May 3, 2000, to provide a defense to plaintiff. The possible existence of other coverage does not nullify defendant's obligations to plaintiff under policy No. 6631P530976. The record reveals no reason why the question of the relative obligations of defendant and Travelers could not be adjudicated in another action, such as an action by defendant against Travelers for contribution or indemnification for the cost of defending and indemnifying plaintiff, or an action by Travelers against defendant to recoup some or all of the monies it has already expended in defending plaintiff. See generally National Union Fire Ins. Co. v. Hartford Ins. Co., 677 N.Y.S.2d 105, 109 (1st Dep't 1998), aff'd 93 N.Y.2d 983 (1999).
According to an affidavit from Kevin Martin, Senior Technical Specialist with Travelers, Travelers has been providing a defense to plaintiff; therefore, plaintiff may have incurred minimal or no costs. Of course, Travelers may sue defendant for reimbursement of all or part of the defense costs.
Contempt
"A party may be held in contempt only if it is proven by clear and convincing evidence that the party violated a clear and unambiguous order of the court. The violation need not be willful, but it must be demonstrated that the contemnor was not reasonably diligent in attempting to comply." City of New York v. Local 28, Sheet Metal Workers' Int'l Ass'n, 170 F.3d 279, 282-83 (2d Cir. 1999) (citations and internal quotation marks omitted). "[T]he sanctions for civil contempt serve two purposes: to coerce future compliance and to remedy any harm past noncompliance caused the other party." Weitzman v. Stein, 98 F.3d 717, 719 (2d Cir. 1996).
Defendant's conduct in simply refusing to comply with the May 3, 2000, order without using proper legal procedures to seek judicial determination of its rights relative to the Travelers policy, constitutes clear and convincing evidence of lack of diligence in attempting to comply with the clear and unambiguous terms of the May 3, 2000, order. This conduct made necessary a second motion by plaintiff to compel defendant to do what it has already been ordered to do. Plaintiff is entitled to recover for the harm caused by defendant's noncompliance. Plaintiff's request that defendant be directed to pay plaintiff's legal fees, expenses and costs incurred in making the motion for contempt is granted.
If defendant pays the fees, costs and expenses of this motion, promptly assumes or undertakes to pay for the defense of the DeFiglio action, and reimburses plaintiff's expenditures for its defense to the date on which defendant assumes the defense, plaintiff will have received the relief to which it is entitled on this motion. Before imposing coercive sanctions, the Court extends to defendant a further opportunity to comply with the May 3, 2000, order.
Inasmuch as it appears that Travelers has been providing a defense to plaintiff, plaintiff itself may have incurred minimal or no costs. Reimbursement to Travelers by defendant for expenditures made on plaintiff's behalf by Travelers must be the subject of a separate claim in which the relative obligations of Travelers and defendant can be determined.
CONCLUSION
It is therefore
ORDERED that plaintiff's motion is granted in part and denied in part as set forth below; and it is further
ORDERED that defendant is directed to pay to plaintiff's counsel the reasonable expenses of this motion, including the attorneys fees for making this motion, the amount of payment to be determined by the Court upon submission by plaintiff's counsel to the Court and defendant's counsel of an affidavit setting forth in detail the services provided and the time spent thereon, as well as any costs and expenses. Defendant will then be afforded a 20- day period from the date of mailing of plaintiff's counsel's affidavit to defendant's counsel, to respond if it so desires; and it is further
ORDERED that defendant assume or undertake to pay for the defense of plaintiff in the action entitled DeFiglio v. Halter, et al., Index No. 194004, in New York State Supreme Court in Rensselaer County, and if defendant fails to do so within 20 days, upon an affidavit from plaintiff so stating, the Court will impose coercive sanctions; and it is further ORDERED that defendant reimburse plaintiff for any and all reasonable defense expenses directly incurred by plaintiff not paid by Travelers, the amount of payment to be determined by the Court upon submission by plaintiff to the Court and defendant's counsel of an affidavit from a representative of plaintiff with firsthand knowledge of the payments, setting forth said payments in detail. Defendant will then be afforded a 20-day period from the date of mailing of plaintiff's affidavit to defendant's counsel, to respond if it so desires; and it is further
ORDERED that the relief directed herein is without prejudice to any legal action between defendant and Travelers for adjudication of their relative obligations under the applicable insurance policies; and it is further
ORDERED that all other relief requested herein is denied.
IT IS SO ORDERED.