Stern v. Charter Oak Fire Ins. Co.
(4th Dept., decided 9/28/2012)
Who out there other than I remembers this case and the position it forever occupies in the evolutionary chain of the recoverability of consequential damages against property insurers in New York State? Those who do might understand then why I am blogging about a one-line decision.
Vivian Stern made a claim to The Charter Oak Fire Insurance Company (Travelers) for losses stemming from an armed robbery that occurred at her jewelry store on or before December 28, 2001. For reasons not apparent in the 13 (!) reported decisions of the Fourth Department in this case (most regarding motion practice), a dispute arose between the parties and Stern sued Charter Oak in 2002 for both contractual damages and consequential damages, including future lost profits and future sale value of the business.
In September 2005, Charter Oak moved to dismiss the complaint's consequential damages claim arguing, among other things, that coverage for such damages was negated by the policy's consequential loss exclusion. Onondaga County Supreme Court (Deborah H. Karalunas, J.) granted that motion and plaintiff appealed.
In a decision issued March 16, 2007, the Appellate Division Fourth Department, unanimously affirmed Supreme Court's order dismissing the consequential damages claim, holding:
In that decision, keen-eyed property coverage professionals will notice the Fourth Department's citation to its decision of one month earlier in Bi-Economy Market, Inc. v. Harleysville Ins. Co. of N.Y.,which decision those same professionals will also recall the New York Court of Appeals reversed in the watershed decision on the recoverability of consequential damages against New York property insurers in February 2008.Supreme Court properly granted Charter Oak's motion to dismiss plaintiff's claim for consequential damages, including future lost profits after December 28, 2001 and future sale value of the business. The court also properly granted Charter Oak's motion to preclude plaintiff's expert from testifying with regard to that claim and denied plaintiff's cross motion seeking partial summary judgment determining that the expert's testimony was admissible at trial. The insurance policy expressly excludes coverage for the consequential damages claimed by plaintiff (see Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 37 AD3d 1184 ; J.R. Adirondack Enters. v Hartford Cas. Ins. Co., 292 AD2d 771, 772 ; Crawford Furniture Mfg. Corp. v Pennsylvania Lumbermens Mut. Ins. Co., 244 AD2d 881 ).
So what's a robbed jewelry store owner to do under those circumstances? Make a motion to renew the motion that resulting in the adverse order based on a change in the law, of course. Unfortunately, plaintiff made such a motion to the Appellate Division, which in July 2008 denied her motion and referred her back to Supreme Court with the instruction that "[i]f [she was] is aggrieved by an order of Supreme Court, plaintiff's remedy is an appeal to this Court from that order."
The order to which the Appellate Division was referring was one apparently granted by Supreme Court Justice Karalunas on May 5, 2008, which had denied plaintiff's Bi-Economy-based motion to renew her opposition to Charter Oak's original motion to dismiss plaintiff's consequential damages claim based on the doctrine of "law of the case", which essentially is a "because I already said no" legal doctrine that courts sometimes apply when litigants want a do-over.
So plaintiff appealed that order back to the Appellate Division, Fourth Department, and in February 2009 that court, in light of the intervening opinion of the Court of Appeals in Bi-Economy, modified the order appealed from to grant plaintiff's motion to renew her opposition to Charter Oak's original motion and then, on such renewal, denied Charter Oak's motion to dismiss and reinstated the plaintiff's consequential damages claim:
Following our decision in the prior appeal, the Court of Appeals reversed the order in Bi-Economy Mkt., Inc., concluding under circumstances similar to those present in this case that a contractual exclusion for consequential losses in the insurance policy issued to the plaintiff business did not bar its claim for consequential damages caused by the defendant insurer's alleged breach of the terms of the policy (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 194-196 ; see Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 ).Rearmed with her complaint's consequential damages claims, plaintiff went back to Supreme Court where in late 2009 or early 2010 the parties moved and cross-moved for summary judgment. As best as can be discerned from the limited information available on eCourts, those motions resulted in a November 18, 2010 order denying plaintiff's subsequent motion to correct the motion record and holding that: (1) Charter Oak had breached the insurance policy; (2) that the plaintiff's alleged business failure (aka consequential damages) was not proximately caused by that breach; and (3) that plaintiff was entitled to money damages of $7,887.19, plus interest. That's right -- $7,900. The printing costs already expended in the two previous trips to the Fourth Department had to cost more than the award amount.
While the instant action remained pending, plaintiff moved, inter alia, for leave to renew her opposition to Charter Oak's motion to dismiss her claim for consequential damages, based upon the decisions of the Court of Appeals in Bi-Economy Mkt., Inc. and Panasia Estates, Inc. Supreme Court erred in denying that part of plaintiff's motion for leave to renew with respect to consequential damages based upon the doctrine of law of the case and instead should have granted leave to renew and, upon renewal, denied Charter Oak's motion. "[A] court of original jurisdiction may entertain a motion to renew or [to] vacate a prior order or judgment even after an appellate court has rendered a decision on that order or judgment" (Tishman Constr. Corp. of N.Y. v City of New York, 280 AD2d 374, 377 ). Furthermore, we conclude that, because "the analysis employed by this [C]ourt in the prior appeal no longer reflects the current state of the law, the doctrine of law of the case should not be invoked to preclude reconsideration of" Charter Oak's motion to dismiss plaintiff's claim for compensatory damages (Szajna v Rand, 131 AD2d 840, 840 ; see Foley v Roche, 86 AD2d 887 , lv denied 56 NY2d 507 ). We therefore modify the order accordingly.
Apparently having never heard of throwing good money after bad, or perhaps having unlimited resources to file and respond to six (!) more appellate motions prior to perfecting an appeal (five for filing extensions and one pro hac vice admission of new appellate counsel for Charter Oak), coupled with the fact that a relative of some kind assumed lead counsel responsibilities for her, plaintiff appealed Supreme Court's order denying her consequential damages and awarding her only $7,887.19 in contractual damages, plus interest.
Which brings the story of Stern v. Charter Oak to present. In a "for reasons stated in the decision at Supreme Court" one-sentence memorandum decision issued on September 28, 2012, the Fourth Department unanimously affirmed Justice Karalunas' nth order, effectively concluding the case. Except, of course, for perhaps another motion to renew and a motion for leave to appeal to the Court of Appeals. Set your Google Scholar alert.