Opinion
Index No.: 22757/2019E
01-07-2020
LIBERTY MUTUAL GENERAL INSURANCE COMPANY, Petitioner(s), v. HARRY CRUZ and GLORIA CRUZ, Respondent(s), and KEMPER INSURANCE COMPANY a/k/a ALPHA PROPERTY & CASUALTY INSURANCE COMPANY and HEPHZIDAH KEMOKAI, Proposed Additional Respondents.
NYSCEF DOC. NO. 57 Motion Calendar No.: 2
Motion Date: 01/06/2020 DECISION/ ORDER
Present: Hon. Donald A. Miles Justice Supreme Court Recitation, as required by Rule 2219(a) of the C.P.L.R., of the papers considered in the review of the notice of cross motion by Kemper to dismiss Liberty's Petition for lack of personal jurisdiction:
| Papers Numbered | |
|---|---|
| Notice of Cross Motion by Kemper/Alpha, Affirmation insupport and Exhibits annexed | 1 |
| Affirmation in Opposition by Liberty | 2 |
This Court, sua sponte, vacates and recalls its prior decision and order dated October 16, 2019, whereby the Court erroneously granted Petitioner's application for a stay of arbitration, to the extent of temporarily staying the arbitration, without first deciding the threshold issue of lack of personal jurisdiction over the proposed additional respondents as raised by the instant cross motion to dismiss, by holding that as Liberty had raised a triable issue of fact regarding the existence of insurance coverage on the offending vehicle, the matter would be scheduled for a framed issue hearing, and now substitutes the following:
BACKGROUND
By amended notice of petition, amended petition, and supporting documents filed on April 22, 2019 (hereinafter the commencement papers), Liberty commenced the instant CPLR Article 75 proceeding seeking, among other things, a permanent stay of an uninsured motorist (UM) arbitration. Kemper/Alpha have submitted an affirmation in opposition to the petition claiming that the Court has no personal jurisdiction over them. Kemper/Alpha have also cross moved for dismissal of the petition on this ground.
The petition alleges that Liberty is a foreign corporation authorized to engage in the insurance business in the State of New York. Liberty issued a liability policy to respondent Harry Cruz (hereinafter Cruz). On February 15, 2019, Liberty received a demand for arbitration of an uninsured motorist claim from Cruz for personal injuries sustained in an automobile accident that occurred on August 5, 2018 in the Poconos in the State of Pennsylvania (hereinafter the subject accident) as a result of the negligence of an uninsured motorist.
The Petition was amended because Petitioner alleges it was again served a Demand for Arbitration, dated March 19, 2019 alleging the same facts and issues.
A police report of the subject accident revealed that at the time of the accident, Mr. Cruz was operating his 2015 Nissan Rogue SUV when it was rear-ended by a vehicle owned/operated by tortfeasor and proposed additional respondent Hephzidah Kemokai (hereinafter Kemokai). After conducting an investigation, Liberty determined that Kemokai was insured by Kemper/Alpha for the period of June 14, 2018 to December 14, 2018.
Liberty's Petition for a Permanent Stay
A party seeking a stay of arbitration of a claim for UM benefits has the initial burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay (Government Employees Ins. Co. v. Hua Huang, 139 A.D.3d 950, 951, 32 N.Y.S.3d 273 [2nd Dept 2016] citing Matter of Hertz Corp. v. Holmes, 106 A.D.3d 1001, 1003, 966 N.Y.S.2d 157 [2nd Dept 2013] ). Thereafter, the burden is on the party opposing the stay to rebut the prima facie showing (Hertz Corp. v. Holmes, 106 A.D.3d 1001, 1003, 966 N.Y.S.2d 157 [2nd Dept 2013] citing, Metropolitan Property & Cas. Ins. Co. v. Singh, 98 A.D.3d 580, 949 N.Y.S.2d 638 [2nd Dept 2012]). Where a triable issue of fact is raised, the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing, and the appropriate procedure under such circumstances is to temporarily stay arbitration pending a determination of the issue. Matter of Hertz Corp. v. Holmes, 106 A.D.3d 1001, 1003, 966 N.Y.S.2d 157 [2nd Dept 2013]). Liberty has annexed five exhibits to the amended petition labeled A through E. Exhibit A is described as Cruz's demand for arbitration. Exhibit B is a police accident report pertaining to the subject accident; Exhibit C is described as a Cancellation Notice issued by Alpha to its insured Kemokai. Exhibit D is a copy of email communication between Kemper and Liberty addressing issue of the electronic cancellation. Exhibit E is described as a copy of the Uninsured Motorist Endorsement Clause of the automobile liability insurance policy issued by Liberty.
Kemper/Alpha have not objected to or contested the admissibility of any of the documents annexed to Liberty's petition. Instead, Kemper/Alpha have opposed Liberty's request to add them as additional proposed respondents, on the basis that the Court lacks personal jurisdiction over the acts of Kemokai who resides in Arizona and where the accident occurred in the Commonwealth of Pennsylvania. Kemper/Alpha have also made a separate cross motion to dismiss the petition on that basis and that Alpha has no presence in the State of New York.
Liberty's Petition to Add Additional Respondents
According to the amended petition, the accident herein occurred in the Commonwealth of Pennsylvania. The police report lists the Kemokai vehicle with license plate number D00536611 and registered in the State of Arizona. Kemokai's address is listed as 527 South Hall, Unit 102, Mesa, Arizona with an Arizona driver's license. The respondent Cruz is listed on the police report as residing at 2725 Fish Avenue, Bronx, New York 10489 and his vehicle has plate number GWG7204 for the State of New York. Liberty's commencement papers include an affidavit of service demonstrating that Kemokai was served with the commencement papers by certified mail return receipt requested at the Arizona address. Use of certified mail, return receipt requested is proper in accordance with the service requirements of CPLR § 7503(c).
Kemper/Alpha are the only proposed additional respondents who have appeared in the instant proceeding. They have opposed the application to add them as additional respondents on the grounds that this court cannot obtain personal jurisdiction over the acts of Kemokai, who resides in Arizona and where the accident occurred in Pennsylvania and that Kemper/Alpha have no presence in New York. In light of the foregoing, the Court as a matter of threshold, must determine the issue of personal jurisdiction raised by Kemper/Alpha's cross-motion.
The respondents have appeared through counsel but take no position regarding the petition or cross motion, except to agree on the record to provide pre-arbitration discovery to Petitioner, including but not limited to Examination under Oath of both respondents and Independent Medical Examinations, pursuant to the policy endorsement.
Kemper/Alpha's Cross Motion to Dismiss
Kemper/Alpha have opposed the petition and cross moved for an order pursuant to CPLR §§ 302 and 3211(a)(8) dismissing Liberty's instant petition based on the lack of personal jurisdiction. New York's long-arm statute, CPLR § 302, provides acts which are the basis of jurisdiction over a non-domiciliary. "To determine whether a non-domiciliary may be sued in New York, we first determine whether our long-arm statute (CPLR 302) confers jurisdiction over it in light of its contacts with this State" (America/International 1994 Venture v. Mau, 146 AD3d 40, 51 [2nd Dept 2016] citing, LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214 [2000]). "If the defendant's relationship with New York falls within the terms of CPLR § 302, we determine whether the exercise of jurisdiction comports with due process" (Id.).
CPLR 302(a) is a "single act statute" (America/International 1994 Venture v. Mau, 146 AD3d 40, 51 [2nd Dept 2016] citing, Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 [1988]). "[P]roof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted" (America/International 1994 Venture v. Mau, 146 AD3d 40, 51 [2nd Dept 2016] citing, Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460 at 467 [1988] ). "Purposeful activities are those with which a defendant, through volitional acts, 'avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws' " (America/International 1994 Venture v. Mau, 146 AD3d 40, 51 [2nd Dept 2016] citing, Fischbarg v. Doucet, 9 N.Y.3d 375, 380 [2007]).
In support of the cross motion, Kemper/Alpha have submitted an affidavit of its claims representative, M. Lynn Johnson (hereinafter Johnson). It has also submitted internet search results from the New York State Department of Financial Services, the Declaration Page of the policy issued by Alpha to Kemokai and the Cancellation Notice effective 12:01 am on July 22, 2018 for non-payment of premium.
Johnson's affidavit is based on personal knowledge and avers the following facts, among others. Alpha is a Texas based corporation not authorized to conduct business in the State of New York. Alpha does not control any New York State authorized company nor is it controlled by any company authorized to conduct business in the State of New York. Alpha does not issue or deliver contracts to New York State residents or to corporations authorized to do business in New York State. Alpha has no employees either located in or working to solicit business in New York State. Alpha does not collect premiums, membership fees, assessments or other consideration for any contracts in New York State. The policy of insurance issued by Alpha to Kemokai is an Arizona policy, which was properly cancelled prior to the date of loss.
In Reply and in opposition to the cross motion, Liberty contends that New York's Long-Arm statute allows a court to exercise personal jurisdiction over a non-resident defendant who commits a "tortious act" outside the state causing injury to person or property within the state (other than defamation) since the respondents are New York residents who allege injuries resulting from a rear-end motor vehicle accident due to Tortfeasor/Proposed Respondent Kemokai's negligent operation of her vehicle and who at the time was insured under a policy with Kemper/Alpha.
Based on the Johnson affidavit, this Court finds that Kemper/Alpha does not have sufficient contacts with New York State to be subjected to personal jurisdiction here. Ms. Johnson's affidavit establishes that Alpha is a foreign insurer with insufficient contacts for the exercise of the Court's long-arm jurisdiction (CPLR 302; Geico v. Basedow, 28 A.D.3d 766, 816 N.Y.S.2d 106, [2nd Dept 2006]; Eveready Insurance Co. v. Modeste, 25 A.D.3d 695, 810 N.Y.S.2d 89 [2nd Dept 2006] ); Eagle Insurance Co. v. Gutierrez-Guzman, 21 A.D.3d 489, 801 N.Y.S.2d 328 [2nd Dept, 2005]).
Under these circumstances, the Court has no personal jurisdiction over Kemper/Alpha and Kemokai and can neither add them as a proposed additional respondents or order them to participate in a framed issue hearing on the existence of insurance coverage (Matter of Eagle Ins. Co. v. Gutierrez-Guzman, 21 A.D.3d 489, 801 N.Y.S.2d 328 [2nd Dept 2005). This court is not persuaded by petitioner's assertion that jurisdiction lies over the proposed additional respondents based upon injuries caused to the respondents within the state of New York. The alleged injuries to the respondents were caused at the time of the accident in the Commonwealth of Pennsylvania. Therefore, the petition is granted only to the extent of temporarily staying arbitration, pending the completion of discovery, pursuant to the policy endorsement.
CONCLUSION
Accordingly, it is hereby
ORDERED that the branch of Liberty's amended petition seeking an order permanently staying an uninsured motorist arbitration is denied and it is further
ORDERED that the branch of Liberty's amended petition seeking an order temporarily staying an uninsured motorist arbitration pending a determination of a framed-issue hearing on the issue of the existence of insurance coverage is denied, and it is further
ORDERED that the branch of Liberty's amended petition seeking an order adding Kemper Insurance Company, Alpha Property & Casualty Insurance Company and Hephzidah Kemokai as additional respondents is denied, and it is further
ORDERED that the cross motion by Kemper/Alpha for an order dismissing the petition as to the proposed additional respondents, pursuant to CPLR §§ 3211(a)(8) and CPLR 302, is granted and it is further
ORDERED that the branch of Liberty's amended petition seeking a temporary stay to allow for pre-arbitration discovery is granted and it is further
ORDERED, that the parties shall proceed to arbitration after the completion of the discovery, and it is further
ORDERED, that this proceeding is dismissed, and it is further
ORDERED, that the Clerk of the Court is directed to mark this proceeding disposed.
This constitutes the decision and order of this Court. January 7, 2020
DATE
/s/_________
HON. DONALD A. MILES, JSC.