Monday, October 27, 2008

Court Denies Joint Trial of Related DJ and Subrogation Actions

Leeco Construction Co. v. United States Liab. Ins. Co.

(Sup. Ct., New York Co., decided 10/17/2008)

Leeco Construction performed work for Roebling Court Condominiums that resulted in some water damage.  Harleysville paid for that property damage and brought a subrogation action against Leeco based on negligence.  Leeco commenced a declaratory judgment action against its own insurers, including United States Liability Insurance Company, for defense and indemnification coverage in relation to Harleysville's subrogation action, and then moved for a joint trial of both actions pursuant to CPLR § 602.

In denying Leeco's motion for a joint trial, New York County Supreme Court Justice Judith Gische reasoned:
When requested, this court may order either a consolidation or joint trial of actions, serving the goal of efficiency and economy. The actions being joined must have a common question of law or fact. CPLR § 602. The test to determine whether the actions have a common question of law or fact is usually met if evidence that would be admissible in one action would also be admissible in the other. Maigur v. Saratogian, Inc., 47 A.D.2d. 982 (3rd Dept. 1975). There are, however, countervailing considerations that may weigh against consolidation or joint trial. Some of these considerations may be jury confusion, or the prejudice of a substantial right.
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Where one action for declaratory judgment relating to insurance coverage could possibly prejudice another action, the motion for joint trial must be denied. Orange v. Swiftway Supermarkets, 32 A.D.2d 631 (lst Dept. 1969). In the present case, whether or not the movants are covered by insurance could prejudice a jury in deciding whether or not they are also liable for the actions that occurred. When a jury has to decide whether there is insurance coverage, they may be persuaded to award or deny an award for damages based on the presence or absence of insurance. A jury may also be inclined to award damages based on the amount of insurance coverage there is.  Conversely, if no insurance is present, a jury may decide to not “punish” the person not covered by insurance, and, therefore, not award the plaintiff damages. This clearly creates prejudice that can be avoided by having separate juries deciding these issues.  By having the cases decided by separate juries, it gives each jury the opportunity to be fair to the parties involved and determine whether each plaintiff has meritorious claim, regardless of whether there is insurance coverage for the claim.
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Although the first and second action have parties in common, the parties are wearing different hats in each action and have different claims with different burdens of proof. A jury may get confused as to which party has the burden to prove their claims in one case, but defend in another. By keeping the claims separate, this confusion is avoided. When litigants are adverse parties in different actions, "the preservation of separate actions and the pleadings therein will tend to a better understanding by a jury of the parties and the issues in each case." Padilla v. Greyhound Lines, Inc.,  29 A.D.2d 495 (1st Dept. 1968).
For related but separate DJ and subrogation actions, it would be better to try them separately than together, at least from the insurers' perspectives.

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