Opinion
721692/17
04-09-2019
Jules Francois PARISIEN, M.D., a/a/o Olaveria, Eduardo, Plaintiff, v. OMNI INDEMNITY CO., Defendant.
Attorney for the Plaintiff: The Rybak Firm, PLLC, 1810 Voorhies Avenue, 3rd Floor Suite 7, Brooklyn, New York 11235 Attorney for the Defendant: Freiberg, Peck & Kang, LLP, 200 Business Park Drive, Suite 200, Armonk, New York 10504
Attorney for the Plaintiff: The Rybak Firm, PLLC, 1810 Voorhies Avenue, 3rd Floor Suite 7, Brooklyn, New York 11235
Attorney for the Defendant: Freiberg, Peck & Kang, LLP, 200 Business Park Drive, Suite 200, Armonk, New York 10504
Consuelo Mallafre-Melendez, J.
This is an action by a provider to recover assigned first-party no-fault benefits. Defendant moves for summary judgment pursuant to CPLR 3212. Plaintiff opposes Defendant's motion and cross moves for summary judgment for payment of medical bills incurred from its treatment of assignor, Eduardo Olaveria.
On April 8, 2015 the insured, Eimy Peguero, applied for and was issued a Pennsylvania automobile insurance policy with Defendant. On her application, Ms. Peguero stated that she resided and garaged the vehicle at her residence in Reading, Pennsylvania. On June 3, 2016, Ms. Peguero's common law husband, Eduardo Olaveria, was allegedly injured when Ms. Peguero's car was hit in the rear as he was driving in the Bronx. Mr. Olaveria underwent treatment by Plaintiff and filed for No-Fault benefits. On October 10, 2016 Defendant, through their attorneys, conducted an Examination Under Oath (EUO) of Mr. Olaveria and its insured Ms. Peguero. It is noted that Mr. Olaveria required an interpreter during the examination. Defendant claims that as a result of her testimony during the EUO they determined that Ms. Peguero made material misrepresentations in the procurement of the insurance policy. As a result, Defendant retroactively rescinded Ms. Peguero's policy and returned all premiums paid.
In its motion for summary judgment Defendant argues that Pennsylvania law applies to this matter. Pennsylvania law permits retroactive rescission of a policy where the undiscovered fraud was of such a nature that it is clear an insurer would never have accepted the risk inherent in issuing the policy. Defendant claims that as the policy was void ab initio , no policy coverage exists from which Plaintiff can recover and the action must be dismissed.
In determining a conflicts of law issue, the first inquiry must be whether there is an actual conflict between the laws of the two jurisdictions (See Matter of Allstate Ins. Co. [Stolarz—New Jersey Mfrs. Ins. Co.], 81 NY2d 219, 223 [1993] ; Shaw v. Carolina Coach, 82 AD3d 98 [2d Dept. 2011] ; Bonded Waterproofing Servs., Inc. v. Anderson-Bernard Agency, Inc., 86 AD3d 527 [2d Dept. 2011] ; Jimenez v. Monadnock Construction, Inc., 109 AD3d 514 [2d Dept. 2013] ). In this case there is clearly a conflict because Pennsylvania law gives an insurer a common law right to retroactively rescind an automobile insurance policy within a reasonable time of a discovered fraud or a material misrepresentation of such nature that the insurer would not have assumed the risk ( Erie Insurance Exchange v. Lake, 543 Pa. 363 [1996] ). New York, on the other hand, does not permit the retroactive cancellation of an automobile insurance policy. "It is well settled that Vehicle and Traffic Law § 313 ‘supplants an insurance carrier's common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively’ " (Matter of Metlife Auto & Home v. Agudelo , 8 AD3d 571, 572 [2d Dept. 2004] quoting Matter of Liberty Mut. Ins. Co. v. McClellan, 127 AD2d 767, 769 [2d Dept. 1987] ; see Matter of Integon Ins. Co. v. Goldson , 300 AD2d 396, 397 [2d Dept. 2002] ; Matter of Insurance Co. of N. Am. v. Kaplun , 274 AD2d 293, 297—298 [2d Dept. 2000] ; Matter of Global Liberty Insurance co. of NY v. Pelaez, 84 AD3d 803 [2d Dept. 2011] ).
Having established that a conflict of laws exists, the court must next determine whether the applicable rules lie in principles governing torts or contracts. The Second Department holds that such an issue arising in the context of a motor vehicle accident, must be resolved by the conflict of law rules relevant to contracts, not torts ( Unitrin Direct/Warner Ins. Co. v. Brand, Supreme Court , 120 AD3d 698 [2d Dept. 2014] ); Matter of Eagle Ins. Co. v. Singletary , 279 AD2d 56 [2d Dept. 2000] ; Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 NY2d at 226 ; Zurich Ins. Co. v. Shearson Lehman Hutton , 84 NY2d 309 [1994] ).
To determine which state's laws apply, the courts use the flexible " ‘center of gravity’ or ‘grouping of contacts’ inquiry, which permits consideration of the ‘spectrum of significant contacts’ in order to determine which state has the most significant contacts to the particular contract dispute" ( Matter of Eagle Ins. Co. 279 AD2d at 58—59 quoting Matter of Allstate Matter of Allstate Ins. Co. [Stolarz--New Jersey Mfrs. Ins. Co.], 81 NY2d at 226 ; Matter of Midland Ins. Co. , 16 NY3d 536, 543 [2011] ; Jimenez v. Monadnock Constr., Inc , 109 AD3d). "In general, significant contacts in a case involving contracts, in addition to the place of contracting, are the place of negotiation and performance, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties" ( Matter of Eagle Ins. Co. , 279 AD2d at 59 ). "In the context of liability insurance contracts, the jurisdiction with the most ‘significant relationship to the transaction and the parties’ will generally be the jurisdiction ‘which the parties understood was to be the principal location of the insured risk ... unless with respect to the particular issue, some other [jurisdiction] has a more significant relationship’ " ( Matter of Midland Ins. Co. , 16 NY3d at 544, quoting Zurich Ins. Co. v. Shearson Lehman Hutton , 84 NY2d at 318 ). "In the case of a noncommercial vehicle, which is by its nature mobile, the principle location of the insured's risk is the place where the vehicle is to be principally garaged" (Matter of Eagle Ins. Co. v. Singletary , 279 AD2d at 59 citing Restatement [Second] of Conflict of Laws § 193, Comment c).
Here, when Ms. Peguero applied for her automobile insurance policy in Pennsylvania, she indicated on her application that she resided in Pennsylvania and owned a vehicle that was registered and garaged in Pennsylvania. Ms. Peguero's driver's license is also issued by the State of Pennsylvania. The Defendant is an insurance company doing business in Pennsylvania. The only connection to New York State in this matter is that Plaintiff's assignor, the insured's common law husband, was injured while driving the insured vehicle in New York. Therefore, under New York's conflict of law rules, Pennsylvania law is controlling in this matter (see Compass Medical, P.C. v. Infinity Group , 46 Misc 3d 146[A] [App Term, 2d Dept, 11th & 13th Jud Dists 2015]; Delta Diagnostic Radiology, P.C. v. Infinity Group , 43 Misc 3d 130[A] [App Term, 2d Dept, 11th & 13th Jud Dists 2014]; Optimal Well—Being Chiropractic, P.C. v. Infinity Ins. Co. , 46 Misc 3d 27 [App Term, 2d Dept, 11th & 13th Jud Dists 2014]; Matter of Government Empls. Ins. Co. v. Nichols , 8 AD3d 564 [2d Dept. 2004] ; Matter of Eagle Ins. Co. v. Singletary , 279 AD2d at 58 ).
In support of its motion for summary judgment, Defendant submits the EUO transcripts of Eimy Peguero and Eduardo Olaveria. Defendant submits these EUO transcripts in admissible form as the testimonies therein were obtained under oath (see Rodriguez v. Ryder Truck, Inc. , 91 AD3d 935 [2d Dept. 2012] ; Zabari v. City of New York , 242 AD2d 15 [1st Dept.1998] ; Jamaica Dedicated Medical Care, P.C. v. Praetorian Ins. Co. , 47 Misc 3d 147[A] [App Term, 2d Dept, 11th & 13th Jud Dists 2015] ). "The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" ( Winegrad v. New York Univ. Med. Ctr. , 64 NY2d 851, 853 [1985] ). "The failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers" (id. ).
This court adheres to Pennsylvania's law permitting retroactive rescission of an automobile insurance policy in cases of material misrepresentation. However, Defendant's own submissions raise a triable issue of fact as to whether the insured resided in Pennsylvania at the time of the accident and whether she made material misrepresentation concerning her domicile and the garaging of her car in the procurement of the policy (see Sure Way NY, Inc. v. Travelers Insurance Company , 60 Misc 3d 139[A] [App Term, 2d Dept, 11th & 13th Jud Dists 2018]; see also Winegrad v. New York Univ. Med. Ctr. , 64 NY2d 853 ; Sandiford v. Kahn , 84 AD3d 1209 [2d Dept. 2011] ).
The recent Appellate Term conflict of laws case, Sure Way NY, Inc. v. Travelers Insurance Company , addressed a similar issue wherein the defendant auto-insurer retroactively rescinded the insurance policy claiming that the assignor resided in New York and not in Florida ( Sure Way NY, Inc. v. Travelers Insurance Company , 60 Misc 3d 139[A] ). The Court applied Florida law which permits retroactive rescission (id. ). Nonetheless, the court found that the defendant auto-insurer, by its very own submissions, raised a triable issue of fact as to whether the assignor resided in New York or Florida at the time of the accident (id. ). As a result, the court affirmed the lower court's decision and found that the defendant auto-insurer failed to meet its burden on its own motion for summary judgment (id. ).
Similarly, the Second Department in Matter of Nationwide Ins. Co. v. Guareno , affirmed the lower court's application of Virginia law which permitted retroactive rescission of the subject auto insurance policy ( Matter of Nationwide Ins. Co. v. Guareno , 278 AD2d 419 [2000] ). However, the court found that there were questions of fact as to whether the insured made material misrepresentations in the application for insurance and, therefore, whether the defendant auto-insurance company properly cancelled her policy (id. ).
In support of its motion, Defendant asserts that the Peguero and Olaveria's EUO provide conclusive proof that its retroactive rescission of the insured's policy was proper based on certain material misrepresentations regarding domicile. This court disagrees. Rather, careful review of both EUO transcripts reveal that there are issues of fact as to whether Mr. Olaveria and Ms. Peguero resided in Pennsylvania at the time the policy was procured and/or at the time of the accident. Based upon their testimonies, the couple appear to be young people of limited means who supply groceries for the household in return for their dwelling. Both testify that they travel to the Bronx on weekends to visit Ms. Peguero's father and her young son who lives with her father. Mr. Olaveria is a mechanic who works on cars with his uncle when work is available at a rear yard in Reading, Pennsylvania. Ms. Peguero braids hair for a living and travels to where her clients live to render her services. She has clients in Pennsylvania and in New York. Although unconventional, Mr. Olaveria and Ms. Peguero manner of living and making ends meet does not demonstrate that they are not domiciled in Pennsylvania. It is certainly not definitive proof that they are domiciled in New York. Aside from these EUO transcripts, Defendant provides no other admissible evidence in support of its position that Ms. Peguero was not a resident of Pennsylvania at the time she procured the policy or at the time of the accident.
Defendant argues that an insurance company must only show that it provided notice to the insured in proper form and proper mailing in order to satisfy its burden on summary judgment. Defendant cites numerous Appellate Term cases in support of this proposition. However, in those cases there were no issues of fact as to whether there existed a material misrepresentation. Contrary to Defendant's assertions, the alleged existence of a material misrepresentation is not a foregone conclusion upon which summary judgment must be granted. Rather, it is an issue which must be determined by a trier of fact, not on summary judgment.
Based on the foregoing, Defendant failed to meet its burden of establishing entitlement to summary judgment as its own moving papers show that a material issue of fact exists (see Zuckerman v. City of New York , 49 NY2d 557 [1980] ; Winegrad v. New York Univ. Med. Ctr. , 64 NY2d at 853 ; see also Sandiford v. Kahn , 84 AD3d 1209 ; Sure Way NY, Inc. v. Travelers Insurance Company , 60 Misc 3d 139[A] ). Accordingly, Defendant's motion for summary judgment is denied. Plaintiff's cross motion is granted solely to the extent that it made a prima facie showing of timely mailing the requisite statutory billing forms and that payment of no-fault benefits are overdue.
This constitutes the decision and order of this court.