Thursday, June 5, 2008

Injured Party's Direct Action Against Defendant's GL Insurer Dismissed For Lack of Standing

CGL – INSURANCE LAW § 3420(A)(2) – STANDING
Azad v. Capparelli
(2nd Dept., decided 5/27/2008)

Azad sued Capparelli for personal injuries and named Utica National Insurance Group as a defendant in two causes of action, presumably for a declaration that Utica owed Capparelli coverage for Azad's personal injury claims.

In REVERSING the lower court's order and granting Utica's motion, dismissing the two causes of action against Utica based on the plaintiff's lack of standing to maintain a direct action against it, the Second Department noted that Azad was neither a named insured under Capparelli's CGL policy with Utica, nor had she obtained a money judgment against Capparelli that remained unsatisfied for 30 days, as required under Insurance Law § 3420(a)(2).

Recall that the DJ/late notice bill that is in the works (see, STATUS UPDATE (Part II) -- Late Notice/Material Prejudice Bill in New York State), proposes to add language to CPLR § 3001 permitting "a party who has brought a claim for personal injury or wrongful death against another party [to] maintain a declaratory judgment action directly against the insurer of such other party". If/when that bill is passed and becomes effective, plaintiffs like Azad will be able to maintain direct actions against the alleged insured tortfeasors' liability insurers prior to obtaining money judgments against the insureds.

2 comments:

richard jaffe said...

Not much information about the underlying facts of the case. However, in cases such as those where a pedestrian gets struck by a car and the issue becomes coverage of the offending vehicle vs. UIM, perhaps a special proceeding would be more efficient to make a determination of coverage instead of including it in the plenary action?

Roy A. Mura said...

You're right. Special proceedings can and are used routinely to settle coverage issues in UM and SUM claims, but because CPLR article 75 pertains to court supervision of arbitrations -- before and after -- special proceedings aren't well suited to resolve 3rd-party liability coverage disputes.