Opinion
03-0386.
Decided February 16, 2005.
John L. Shea, Esq., Attorney for the Plaintiffs.
Richard J. Cohen, Esq., Attorney for Defendant, Genesee Patrons Co-Operative Insurance Company.
Thomas M. Hirschen, Esq., Attorney for Defendants, LaBarge Agency, Inc. and Andree LaBarge.
Pending before the Court is the motion for summary judgment filed on behalf of the defendant, Genesee Patrons Co-operative Insurance Company (hereinafter "Genesee") to dismiss the complaint as against it. The Court has reviewed the following papers: (1) the notice of motion, dated September 29, 2004; (2) the affirmation in support of motion from Mr. Cohen, also dated September 29, 2004, plus attached exhibits A through L; (3)the affidavit of Alan Mitchell, sworn to on September 29, 2004; (4) the affidavit of Michael J. Ryan, sworn to on September 29, 2004, plus attached exhibits; (5)the memorandum of law submitted by Genesee in support of its motion; (6) the affidavit in opposition by the attorney for LaBarge Agency, Inc. and Andree LaBarge (hereinafter collectively referred to as "LaBarge"), sworn to on November 3, 2004; (7) the affidavit of Stephen J. Lloyd, sworn to on October 28, 2004; (8) the affirmation in opposition by the attorney for the plaintiffs, dated November 29, 2004; (9) the affidavit of plaintiff P.J. Lenhard, sworn to on November 23, 2004; (10) the affidavit of Ann Lenhard, sworn to on the same date; (11) the memorandum of law submitted by the plaintiffs in support of their position; (12) the reply affirmation by the attorney for Genesee, dated December 9, 2004; and (13) the reply memorandum of law submitted by Genesee.
Genesee has failed to provide sufficient evidence that the misrepresentations made by the plaintiffs in their application for insurance were material. Additionally, Genesee has failed to show, as a matter of law, that the misrepresentations made by Ann Lenhard during its investigation were made with the intention to deceive or defraud the company at the time they were made. For these reasons, the motion for summary judgment dismissing the complaint against Genesee must be denied.
The relevant facts of this case may be summarized as follows: the plaintiffs began construction on their "dream home", located in the town of Altona, Clinton County, some time during 1998. They were actually living in another house in Ellenburg Depot at the time. Mr. Lenhard worked as a licensed chiropractor for the Mohawk tribe in their holistic healing clinic located on the Ganienkeh Territory. Mrs. Lenhard also worked in that facility. One of his patients was Andree LaBarge. The Lenhards approached Ms. LaBarge regarding getting insurance coverage for the new house as it was being built. It is undisputed that Ms. LaBarge filled out the insurance application and indicated the wrong address for the premises, she put in the plaintiffs' actual residence rather than the new house, and also indicated the house was located five miles from the nearest fire department. The actual distance is somewhere between nine and nine and one-half miles.
Mrs. Lenhard signed the application without reading it and so did not notice the errors in it. On May 18, 1999, Ms. LaBarge contacted an underwriter for Genesee, Edward Russell, by telephone regarding the plaintiffs' application. They discussed various items including what type of insurance to issue. They did not discuss the distance of the house from the closest fire hydrant or fire department.
Mr. Russell testified regarding the three risk categories involved in issuing insurance policies: the first is "protected", meaning the premises are located within 1000 feet of a fire hydrant and within five miles of a fire department; the second category is "semi-protected", meaning more than 1000 feet from a fire hydrant but still within 5 miles of the fire department; last is "unprotected", meaning neither within 1000 feet of a fire hydrant and more than five miles from the fire department. All these definitions come from the Underwriters Rating Board and its manual, which is used by Genesee in assessing applications for insurance. Mr. Russell testified the classification is taken into consideration when the decision is made by Genesee whether or not to accept a particular risk.
Genesee classified the Lenhards' new house as "semi-protected" and decided in this case to accept the risk and wrote a policy for a total of $595,000.
Construction continued on the house and it was essentially completed by late fall 2000. It was a three-story post and beam house, entirely constructed of work and heated by an outdoor, wood-fired furnace. The Lenhards continued to live at their home in Ellenburg Depot while moving their possessions into the new house.
However, in December 2000, Mr. Lenhard left his position at the Ganienkeh clinic due to conflicts with tribal leaders as well as some health issues. Mr. Lenhard left Clinton County in January 2001, along with the plaintiffs' daughter, for Hawaii where he purchased some land with the intention of moving the family there permanently. Mrs. Lenhard testified she had encounters with members of the Mohawk tribe after Mr. Lenhard left which she found threatening; these persons were asking about the whereabouts of her husband. Mrs. Lenhard testified she did not tell them.
Mrs. Lenhard listed the new house for sale in early February 2001. A few days later, Mrs. Lenhard went to the new house where she added wood to the outdoor furnace and left for an over-night trip to Schenectady. When she returned the following afternoon, she discovered the new house had burned completely to the ground. The Clinton County fire investigator ruled the fire "unfounded", meaning he could not determine an exact cause for the fire, although he suspected certain electrical wires in the southwest area of the house started it. Since no definite cause was found, Genesee sent an investigator who interviewed Mrs. Lenhard the day after the fire was discovered. At that time, Mrs. Lenhard told him her husband was in Michigan. During a second interview in March 2001, Mrs. Lenhard told the same investigator her husband and his sister had been visiting relatives in Michigan and consulting with doctors there at the time of the fire. She correctly informed the investigator her husband had left the area around the middle of January 2001. But she told the investigator she was traveling to Michigan too. In fact, Mrs. Lenhard had made arrangements to travel to Hawaii that month.
The plaintiffs filed a claim with Genesee for the loss which claim was denied by Genesee. The plaintiffs commenced this lawsuit in 2003. Genesee now seeks summary judgment dismissing the complaint against it on the grounds that the plaintiffs made a material misrepresentation in their application for insurance, the distance to the nearest fire department, which voided the policy. Additionally, Genesee alleges, Mrs. Lenhard violated the co-operation clause of the insurance contract by concealing her husband's whereabouts from the insurance company's investigator immediately after the fire.
Faced with a motion for summary judgment, a Court's task is issue-finding rather that issue determination ( see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957)). The party seeking summary judgment must establish its entitlement to same by evidentiary proof in admissible form sufficient to warrant judgment for them as a matter of law ( see Zuckerman v City of New York, 49 NY2d 557, 562 (1980)). If the movant fails to present sufficient evidence to eliminate material issues of fact, the motion must be denied ( see Winegard v New York Univ. Med. Ctr., 64 NY2d 851, 853 (1985)). Further, a court is constrained to view the evidence in the light most favorable to the nonmoving party, giving them "the benefit of every reasonable inference" when deciding whether a triable issue of fact exists ( Boyce v Vasquez, 249 AD2d 724, 726 [3rd Dept. 1998]).
Insurance Law § 3105(a) states that a misrepresentation "is a false representation". The parties agree the statement on the application as to the distance from the fire department meets this definition. Subdivision (b) of that section states that a misrepresentation may void the contract for insurance if it is material, that is, "knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make such a contract". Subdivision (c) goes on the state that in deciding whether a misrepresentation was material, evidence "of the practice of the insurer which made such contract with respect to the acceptance or rejection of similar risks shall be admissible".
In this case, Genesee has presented the affidavit of its current president and CEO, Francis M. Spiotta. At the time the policy was written for the Lenhards, Mr. Spiotta was the executive vice president and CEO of Genesee. In his affidavit, Mr. Spiotta states he has the final decision-making authority over all underwriting decisions. In the case of the Lenhards' application, Mr. Spiotta became involved because of the size of the risk.
Mr. Russell, Genesee's underwriter, testified at his deposition that Genesee considers the distance from the nearest fire department in its decision whether to underwrite the risk. A house that was six or seven miles from a fire department would probably be accepted; a house located 25 miles away would not. Mr. Russell was not asked about a house located nine to nine and one-half miles away. But Mr. Spiotta stated in his affidavit that he has never approved a farm owners policy for over $500,000 where the house in question was more than five miles away from the closest fire department and would not have done in this case had the true distance to the fire department been indicated in the application. Mr. Spiotta included in his affidavit the underwriting guidelines for farm owners.
Whether a misrepresentation is material is generally a question of fact for a jury. However, in cases where the evidence is "clear and substantially uncontradicted", the Court may determine the question of materiality as a matter of law ( Myers v Equitable Life Assurance Society, 60 AD2d 942, 943 [3rd Dept. 1978]). Thus, the burden is on Genesee to "adduce proof as to its underwriting practices with respect to applicants with similar histories" ( Sonkin Associates, Inc. v Columbian Mutual Life Insurance Company, 150 AD2d 764, 765 [2nd Dept. 1989], see also Curanovic v New York Central Mutual Fire Insurance Company, 307 AD2d 435, 438 [3rd Dept. 2003]).
Mr. Spiotta's affidavit does not identify any specific applicants who were denied coverage under similar circumstances. His affidavit on this point then is conclusory and is "insufficient to establish materiality as a matter of law" ( Curanovic v New York Central Mutual Fire Insurance Company, 307 AD2d at 437, cites omitted). The Court notes that Mr. Spiotta is the president and CEO of Genesee and as such it is appropriate for a jury to determine the credibility of his statements ( see, generally, Casey v Ridge Assoc. , 2 AD3d 1145 , 1146 [3rd Dept. 2003]).
There is no question Mrs. Lenhard lied to the insurance company's investigator when asked about where her husband was.
The policy issued in this case contains a co-operation clause: "2. Cooperation — The insured must cooperate with us in performing all acts required by this policy." These acts include submitting to an examination under oath, production of records and financial documents (Page 8 of General Policy Provisions Agreement, attached as Exhibit A to Affidavit of Francis M. Spiotta).
Genesee has cited a number of cases in which the insured willfully failed to produce certain documents or failed to testify under oath at a deposition. In all these cases, the courts found the actions of the insured parties to be a material breach of the policy in question thereby barring recovery under the policy. Genesee did not cite, nor could the Court locate, any case in which the failure to advise the insurance company of a policy holder's location has been deemed to be a material breach of the policy.
In Weissberg v Royal Insurance Co., 240 AD2d 733 [2nd Dept. 1997], cited by Genesee, a residence burned to the ground and the policy holders refused to produce their son, who lived at the house and was home several hours before the fire broke out, for a deposition. In this case, there is no question Mr. Lenhard was not in the area for several weeks before the fire; Mrs. Lenhard told the truth about that. Additionally, both the plaintiffs have appeared for depositions as requested. In another case, Nelson v Allstate Insurance Company, 204 AD2d 592 [2nd Dept. 1994], the fire was determined to have been intentionally set; that is not the case here.
In both the Weissberg and Nelson cases, the courts made the decision that a material breach had occurred under the facts and circumstances of that particular case.
Given the fact that Mrs. Lenhard stated her reason for deceiving the investigator was to protect her husband from any potential danger from his former employer, and given the fact that no proof has been adduced thus far that the statements were made with the intent to defraud Genesee, the Court cannot find as a matter of law that Mrs. Lenhard's deception amounts to a material breach of her duty to co-operate under the contract ( see, generally, Kirkpatrick v State Farm Fire Casualty Company, 255 AD2d 363 [2nd Dept. 1998], false statements made at deposition not sufficient to demonstrate as a matter of law the insured's intention to deceive or defraud the insurance company at the time).
For the reasons stated above, the motion for summary judgment is DENIED.
IT IS ALL SO ORDERED.