Opinion
No. SCR100/13.
2013-05-22
Doreen PIETRANGELO, Plaintiff, v. S & E CUSTOMIZE IT AUTO CORP., Defendant.
Plaintiff self represented. Alan McLaughlin, Harvey Krieger Esq., Merrick, for Defendant.
Plaintiff self represented. Alan McLaughlin, Harvey Krieger Esq., Merrick, for Defendant.
PHILIP S. STRANIERE, J.
Claimant, Doreen Pietrangelo, commenced this small claims action against the defendant, S & E Customize It Auto Corp., alleging that owing to the failure of the defendant to have flood insurance, claimant was not fully compensated for damage to her vehicle caused by Hurricane/Superstorm Sandy. A trial was held on March 21, 2013. Claimant appeared without counsel. Defendant was represented by an attorney.
Because claimant's husband testified, the court will refer to the claimant in the masculine throughout the decision. He stated that on October 26, 2012, he dropped claimant's 2010 Ford Fusion Hybrid at defendant's motor vehicle repair shop for repairs. While in possession of the defendant Hurricane/Superstorm Sandy hit the New York City area. The insurance carriers for both claimant and defendant place the date of loss as October 29, 2012. Each carrier's letter was addressed to both Doreen Pietrangelo and Robert Pietrangelo, yet only Doreen is listed as claimant in this action and no evidence was presented as to exactly who was the owner of the vehicle.
Claimant stated that when he initially contacted the defendant after the storm about the condition of the car, defendant told him that there appeared to be only minor flood damage, such as wet rugs. Claimant alleges that the defendant indicated it would take care of any repairs that resulted from the water damage.
Defendant placed a claim with its liability carrier, Tower National Insurance Company. Tower disclaimed coverage, citing the following reason: “the property damage was caused by significant flooding on the date of loss and thus an act of nature. As the alleged damage was not caused by our policyholder's negligence, we are denying your claim.” It recommended to claimant that his course of action was to notify his own liability carrier.
Claimant asserts he spoke to defendant and defendant indicated that if any damage claim was not covered by claimant's insurance carrier, he would make good on it. Claimant filed a claim with his automobile liability carrier, Safeco Insurance. Safeco declared the vehicle a total loss at $22,156.12 but paid the claimant only $21,156.12 as claimant had a $1,000.00 deductible under the terms of the policy.
Claimant contends that when he asked defendant to reimburse him for the $1,000.00 deductible, defendant refused to pay. Claimant commenced this action alleging that the failure of the defendant to have the appropriate insurance coverage, including flood insurance, constituted negligence of the defendant.
Defendant's witness alleges that the vehicle was stored inside the garage when the storm hit and that the water rose about four feet above ground level. Neither party produced any written agreement setting forth the terms and conditions of the relationship between the parties. Nor was there any testimony as to when the vehicle was delivered to defendant and if the claimant could have removed the vehicle from defendant's repair shop before the storm hit.
Legal Issues Presented:
A. What is the Relationship Between the Parties?
When claimant delivered his vehicle to the defendant to be repaired, a bailment was created [ Burnane v. Poppy's Auto Wreckers, 13 Misc.3d 139(A) ]. A bailment involves the delivery of personal property for a particular purpose under an express or implied contract with the understanding that the personal property shall be redelivered to the person delivering it, or kept until it is reclaimed after fulfillment of the purpose for which it was delivered [9 N.Y. Jur2d, Bailments & Chattel Leases § 1].
The delivery of a vehicle to a garage for repair is the classic example of a mutual benefit bailment. Claimant, as the bailor, expects to pay for the repairs to the vehicle performed by the defendant, as the bailee, and to receive his car back once the repairs have been completed and payment made. Defendant, understands that only temporary possession and not title to the vehicle is being transferred to it, and that upon completion of the contracted for services, and receipt of payment, the car will be returned to the claimant.
When a mutual benefit bailment exists, the bailee's common law obligation is to exercise that degree of care which a reasonably careful person in possession of similar goods would exercise under the same circumstances. This is referred to as an ordinary negligence standard and differs from a “gross negligence” standard applied to gratuitous bailments; that is a bailment for the sole benefit of the bailor; and a “slight negligence” standard applied to bailments for the sole benefit of the bailee.
In this case a mutual benefit bailment was created and an ordinary negligence applied.
B. Was the Defendant Negligent in Failing to Procure Flood Insurance?
The law in New York is clear. There is no liability for the failure of a bailee to procure insurance for the goods delivered to the bailee's possession by the bailor. Therefore, there is no negligence if a bailee fails to obtain insurance for the bailor's goods. If there is no requirement of the bailee to obtain liability or casualty insurance for its customers, there certainly is no requirement to purchase the more specialized coverage provided by flood insurance.
Insurance may be required if there is an agreement between to parties for the bailee to obtain the insurance, a statute requiring insurance, a showing that the custom and usage of the industry, or a course of prior dealings between the parties [9NYJur2d Bailments & Chattel Leases § 28; Lehman v. Fischzang, 52 Misc.2d 80 (1966) ].
Claimant has the burden of establishing the existence of any of these exceptions to the rule in order for the bailee to be required to obtain insurance. Claimant has not produced either a written agreement between the parties, cited a statute, established a course of dealing, or an industry standard which would raise the issue of the negligence of the defendant in failing to obtain insurance.
In fact, Vehicle & Traffic Law Article 12–A which requires Motor Vehicle Repair Shops to be registered and sets rules for their operation, does not require that a shop maintain any insurance as part of the licensing process. Neither does there appear to be any requirement for insurance in a New York State or New York City administrative regulation.
The only potential contract source of insurance coverage for the claimant would be if the claimant could establish he was the third party beneficiary of a contract between the defendant and a third party. For instance if the defendant either was a tenant at the premises and the landlord required such insurance coverage as part of the lease agreement, or if the defendant is the owner of the property and the mortgagee required the coverage as a condition of the mortgage loan. There is no indication that either of these scenarios is applicable. If they did exist then the claimant would have to establish that he would somehow be considered the third party beneficiary of any such insurance requirement.
Claimant submitted a map showing that defendant's repair shop was on the land side of Richmond Terrace at Andros Street, and that across Richmond Terrace there was some waterside land and then the Kill Van Kull. Claimant asserts that because defendant's garage was in a “flood zone” it created a burden on the defendant to obtain flood insurance.
The problem with this allegation is that the claimant's map does not show whether the defendant is located in a flood zone and if in a flood zone, what classification was assigned to the property. Such information would establish what was this property's potential for flooding. Claimant needed to produce copies of the flood map with the classification assigned to the property in existence prior to Hurricane Sandy. Once claimant did that, the next step would be to show that defendant was required to maintain flood insurance or that the vast majority of businesses similarly located as defendant's did in fact have flood insurance. That would create a standard of practice for similarly located businesses.
Finally, after meeting those burdens, claimant would have to establish that even if the defendant did obtain insurance, the policy would cover the type of damages claimant's vehicle suffered. In other words would flood insurance cover damage to a third party's property left in the possession of defendant as a bailment. If such insurance was available, then the issue would be whether the failure of the defendant to purchase it would arise to negligence if defendant made a business decision not to purchase such coverage.
Based on the foregoing, it must be concluded that the failure of the defendant to have casualty or flood insurance is not negligence.
C. Was Claimant's Vehicle Damaged by the Negligence of the Defendant?
Case law has held that when there is a showing that the bailee returned a car in a damaged condition or failed to return the vehicle at all, a presumption of negligence against the shop owner is established [See ICC Metals v. Municipal Warehouse Co., 50 N.Y.2d 657 (1980); Ellish v. Airport Parking Co. of America, Inc., 42 A.D.2d 174(1973) ]. This then shifts the burden of proof to the defendant to show that it was not negligent [Sealey v. Meyers Parking Sys., 147 Misc.2d 217 (1990) ].
Defendant relies on the finding of its carrier, Tower Insurance, that the damage to claimant's car was the result of an “act of nature” as a defense to this or any other claim. Apparently “act of nature” is the politically correct modern equivalent of the common law “act of God.
” In the world of liability litigation, an “act of God” or “act of nature” refers to a natural occurrence over which humans have no control and were not involved in creating the occurrence. The law recognizes that the existence of such occurrences makes it impossible for a human to be negligent and responsible for losses incurred. The acceptance of the act of nature defense relieves the defendant for any liability for the damage to claimant's vehicle.
The court assumes that the carrier has selected the religiously neutral term “act of nature” voluntarily and not as a result of having lost some litigation over the issue.
In some sectors, there are persons arguing that there is a potential problem with this defense. After Hurricane/Superstorm Sandy there were ample reports that the natural phenomena that came together to create a storm of that magnitude, was not in fact a completely “natural” event. Many sources speculated that what made Sandy into a “superstorm” was a result of “global warming” or “climate change,” which is the current popular term for changes in weather patterns
. Supporters of this theory postulate that human activities have made changes in the Earth's atmosphere leading to altered patterns of more extreme weather. If this is true, then the possibility exists that Sandy is not a pure “act of nature” but is the result of human activity. If that were established, then would the “act of nature” defense still be available? Assuming that there is some truth to the theory that man's activities have altered weather patterns, locating a source of the altered weather pattern might be impossible. The act of nature defense would still be available as a defense because the proper party or parties could not be identified with any certainty so as to bring them into the court's jurisdiction. Some court will face this decision sometime in the future. For the moment it is merely intellectual speculation.
Changing the names of phenomena so as to make them more publicly acceptable is not a new idea. For instance, in the early days of the U.S. economic downturns were called “panics.” When that name took on too many negative connotations, the downturns were called “depressions.” Which remained the label until the Great Depression beginning in 1929. So after that the classification was changed to “recession” which is the current term for bad economic conditions unless the current 2008 recession triggers a new designation. There is some indication that global warming has been jettisoned because certain areas of the globe are having colder weather.
In any case, to hold the defendant liable, claimant would have to establish that it was this defendant's activities which either created the act of nature or made the damage it caused worse. No such evidence exists.
Even if there were no “act of nature” defense available to the defendant, claimant would still have to prove that the defendant was negligent in how it stored claimant's vehicle. The testimony was that the claimant's car was stored inside the defendant's shop before the storm surge hit. On its face, this testimony would be sufficient to establish that the cause of the damage was something beyond defendant's control and shifted the burden of proof back to the claimant that the defendant was negligent. There is no showing that the defendant acted in a manner other than that of a reasonable repair shop. Claimant has not established that there is a standard for storage of vehicles used in the repair industry and that the defendant breached that standard. Neither has claimant established that the defendant was aware of a history of flooding at the shop which would have required it to either garage customer's vehicles elsewhere or somehow keep them raised off the ground.
Claimant's cause of action is barred by the defense of “act of nature” and by the claimant's failure to establish that the defendant was negligent in storing the vehicle irrespective of the source of the damage.
D. Was Sandy a Hurricane, a Superstorm or Something Else?
Apparently in the world of insurance liability claims there is a difference in a carrier's requirement to pay on claims depending on if the weather condition reaches the level of a hurricane. A storm must have wind speeds in excess of 75 miles per hour to be considered a hurricane. Although Sandy started a Category 3 storm, when it made landfall in New Jersey its winds were down to Category 1 level. Neither side has presented any evidence as to what was Sandy's status when it made landfall on Staten Island.
Again, if you are one of the thousands of people who were adversely affected by the storm, it really does not matter to you what category storm Sandy was when it landed on Staten Island. All you know is that the storm caused the loss of life, resulted in billions of dollars in property damage, and caused the disruption of countless people's lives.
As Sancho Panza notes in the song “A Little Gossip” in “Man of La Mancha
,” “whether the pitcher hits the stone or the stone hits the pitcher, it's bad for the pitcher,” so whatever Sandy is labeled does not really matter if you suffered a loss. However, this issue will become one the courts will have to deal with along with whether damage was “flood damage” or “wind blown water damage” or some other source and other niceties of the world of insurance coverage.
Man of La Mancha, a musical play by Dale Wasserman, music by Mitch Leigh and lyrics by Joe Darion.
E. Did the Defendant Make an Independent Promise to Pay?
Claimant testified that the defendant promised to “make good” by paying the difference between the book value of claimant's vehicle and the amount paid by any insurance coverage. Defendant denies ever making such statements. There is nothing in writing to support claimant's allegation.
Claimant has submitted what appears to be only the first page of the letter he received from his insurance carrier Safeco. It is dated November 12, 2012 and informs claimant that he will be receiving the book value of the vehicle less the $1,000.00 deductible. It appears to be only the first page because there is no indication of the name of the individual who issued the letter or who signed it on behalf of Safeco.
Claimant also submitted a copy of the letter from defendant's carrier Tower, informing him that the defendant had an “act of nature” defense and that claimant should seek compensation through his own carrier.
The above being the case, even if the defendant did make a statement that he would pay the difference, it was after claimant received these two letters and defendant received a copy of the Tower letter. After that date, defendant reasonably believed that he had no legal liability to the claimant, and that should he be sued he had a valid defense. So any promise to make a payment lacked contractual consideration and is unenforceable. Further, the fact that there was any deductible under claimant's policy was a decision the claimant chose to make. Claimant elected to purchase a policy with a $1,000.00 deductible. Had he been willing to pay a higher premium, claimant could have had a smaller or even no deductible.
Claimant has failed to establish that the defendant created a new valid agreement to pay the cost of claimant's deductible.
Conclusion:
Judgment for defendant. Claimant has failed to prove his cause of action. Under the law of bailments as it currently exists, it is not negligence fora bailee such as defendant to fail to carry insurance to cover the bailor's property. This left claimant with a common law negligence claim and although the law of bailments shifts the burden to the defendant to establish a non-negligent cause for the damage to claimant's property, the Hurricane/Superstorm Sandy qualifies as an “act of nature” which meets that non-negligent standard and relieves the defendant of any liability. Even without the existence of that defense, claimant has not otherwise established that the defendant was in any way negligent in how it secured claimant's vehicle. There is insufficient evidence to establish that the defendant made an independent enforceable promise to compensate the claimant for any difference between his insurance coverage and the value of his vehicle.
Judgment for defendant. Claimant's cause of action is dismissed.
Exhibits, if any, will be available at the office of the clerk of the court thirty days after receipt of a copy of this decision.
The foregoing constitutes the decision and order of the court.