New York County Supreme Court Grants Insurer's CPLR 3211(A)(1) Motion to Dismiss Plaintiff's Complaint Based on Insured's Failure to Submit Timely Proof of Loss

PROPERTY – BURST WATER PIPE-CAUSED WATER LOSS – PROOF OF LOSS REQUEST – MOTION TO DISMISS

Stein v. National General Ins. Co.
(Sup. Ct., NY Co., 6/9/2020)

Just when you thought you understood the "documentary evidence" basis of a CPLR 3211(a) pre-answer motion to dismiss, this decision issues.

In February 2018, Stein's Manhattan apartment sustained water damage from a burst water pipe.  National General investigated the loss and on April 15, 2019, paid Stein $30,519.82 for his loss. Unhappy with the amount of the loss payment, Stein hired a public adjuster, who inspected the loss and estimated the claim at $404,977.78.  National General declined to enter into an appraisal and, on July 9, 2019, sent a demand to Stein for a signed sworn proof of loss to be provided within 60 days.

On October 24, 2019, National General wrote to Stein, denying coverage for his claim based on various grounds, including Stein's failure to submit a signed sworn proof of loss within 60 days. Stein brought this action on February 18, 2020, alleging breach of contract and breach of the covenant of good faith and fair dealing.

In lieu of answering the complaint, National General moved on March 6, 2020 to dismiss Stein's complaint based on CPLR 3211(a)(1) (documentary evidence) and 3211(a)(7) (failure to state cause of action).  In support of its motion, National General submitted its attorney's affirmation with exhibits and a memorandum of law.  The exhibits attached to its attorney's affirmation were:

• a copy of the complaint;
• a copy of the relevant insurance policy;
• a copy of National General’s "Disclaimer of Coverage"; 
• copies of emails exchanged between National General and Stein’s public adjuster, Scott Modlin; 
• copies of emails exchanged between Stein and Modlin; 
• copies of emails sent by Modlin to National General and its representatives; 
• a copy of National General’s May 28, 2019 "Request for Information and Examination under Oath (“EUO”) demand"; 
• a copy of relevant sections of Stein’s testimony at his September 10, 2019 EUO; 
• a copy of National General’s June 24, 2019 letter requesting information and demanding an EUO; 
• a copy of National General’s July 15, 2019 letter requesting information and demanding an EUO; 
• a copy of a July 26, 2019 letter from Stein’s previous attorney; and
• a copy of National General’s July 9, 2019 letter demanding a signed, Sworn Statement in Proof of Loss, as well as the July 10, 2019 delivery receipt from Federal Express.

Stein opposed National General's motion to dismiss on two bases: (1) that National General's motion pursuant to CPLR 3211(a)(1) relied upon Stein's deposition testimony and, therefore, was not properly founded upon "documentary evidence"; and (2) National General should not be permitted to disclaim coverage as it only sent its proof of loss demand to Stein and not to his public adjuster.

In rejecting these arguments and GRANTING the motion, Supreme Court held:

These submissions conclusively resolve all factual issues as a matter of law and conclusively disposes of the plaintiff's claims for breach of contract and breach of the duty of good faith and fair dealing inasmuch as it is well settled that a plaintiff's "failure to file proof of loss within 60 days after receipt of defendant's notice is an absolute defense to an action on the policy, absent waiver of the requirement by the insurer or conduct on its part estopping its assertion of the defense." Hunter v Seneca Ins. Co., 114 AD3d 556, 557 (2014) citing Igbara Realty Corp. v New York Prop. Ins. Underwriting Assn., 63 NY2d 201, 209-210 (1984).  

In opposition, the plaintiff argues (i) that the defendant's motion pursuant to CPLR 3211(a)(1) relies upon the plaintiff's deposition testimony, and therefore is not properly founded upon documentary evidence, and (ii) the defendant should not be permitted to disclaim coverage as it only sent the demand to the plaintiff, not his insurance adjuster. The plaintiff's contentions are without merit. Contrary to the plaintiff's first contention, the defendant's submission of its demand of proof, with service, and the subsequent disclaimer of coverage are sufficient to establish the plaintiff's failure to respond within the 60-day time limit. See Hunter v Seneca Ins. Co., supra. Moreover, on a motion to dismiss pursuant to CPLR 3211(a)(1), documentary evidence may be supplemented by affidavits or deposition testimony that are not disputed. See Rosenbaum, Rosenfeld & Sonnenblick, LLP v Excalibur Grp. NA, LLC, 146 AD3d 489 (1 Dept. 2017). As the plaintiff does not dispute, in his deposition testimony or his opposition papers, that he did not timely respond to the defendant's demand, the court may properly rely on such evidence. See id. 

Furthermore, to the extent that the plaintiff contends that the defendant's failure to serve its demand on his adjuster constitutes a defense to this motion, such an argument is contrary to the plain language of New York Insurance Law § 3407, which only requires service of the demand be made upon the insured. Therefore, the plaintiff fails to rebut the documentary evidence submitted by the defendant, and dismissal pursuant to CPLR 3211(a)(1) is granted. 

As the action is dismissed pursuant to CPLR 3211(a)(1), the court does not reach the portion of the defendant's motion seeking to dismiss the complaint pursuant to CPLR 3211(a)(7).

Can this decision be reconciled with the Bonavita v. GEICO decision that I blogged about last week?  Is it because Stein did not dispute that he failed to submit a timely proof of loss?  Tell me what you think in the comments below.

As of the date of this post, no notice of appeal has been filed.  

No, You May Not Be Excused... Court Denies Insurer's 3211(a)(1)-Based Pre-Answer Motion to Dismiss Declaratory Judgment Action

PERSONAL AUTO – TEMPORARY SUBSTITUTE AUTO – NON-OWNED AUTO – DECLARATORY JUDGMENT ACTION – MOTION TO DISMISS

Bonavita v. Government Employees Ins. Co.
(2nd Dept., 7/22/2020)

Before the Roman Catholic Mass was said in English in Mahwah, New Jersey, my brothers and sisters and I had to ask "May I be excused?" (may, not can) before leaving our assigned seats (assigned theoretically to preserve order in a family of then seven, rivaling siblings) at the dinner table to head back outside to play or into the living room to watch our allotted one hour of television.  The qualifying condition for an affirmative answer from one of our parents was a dinner plate cleared of the meat, starch AND vegetable food groups that made a daily appearance at our dinner table (ask me sometime about the inventive methods my mother came up with to get my brothers and me to finish our green vegetables, especially cellulose-armored asparagus).  There was no leaving our dinner table without finishing your dinner.  Period.  I learned to intensely dislike certain foods, while developing strategies for clearing my plate without eating its unappetizing contents (our family's German Shepherd was one such strategy until she was banned from the dining room during dinner), before I was ten.

Insurers facing declaratory judgment and breach of contract actions sometimes ask to be excused from a lawsuit without getting to the meat and potatoes (and even asparagus) of the action, moving to dismiss the complaints lodged against them before interposing an answer.  In New York state court actions, New York Civil Practice Law and Rules (CPLR) Rule 3211 provides the bases for doing so:

1. a defense is founded upon documentary evidence;  or 
2. the court has not jurisdiction of the subject matter of the cause of action;  or 
3. the party asserting the cause of action has not legal capacity to sue;  or 
4. there is another action pending between the same parties for the same cause of action in a court of any state or the United States;  the court need not dismiss upon this ground but may make such order as justice requires;  or 
5. the cause of action may not be maintained because of arbitration and award, collateral estoppel, discharge in bankruptcy, infancy or other disability of the moving party, payment, release, res judicata, statute of limitations, or statute of frauds;  or 
6. with respect to a counterclaim, it may not properly be interposed in the action;  or 
7. the pleading fails to state a cause of action;  or 
8. the court has not jurisdiction of the person of the defendant;  or 
9. the court has not jurisdiction in an action where service was made under section 314 or 315 ;  or 
10. the court should not proceed in the absence of a person who should be a party; or 
11. the party is immune from liability pursuant to section seven hundred twenty-a of the not-for-profit corporation law .  

Plaintiff Bonavita was driving a vehicle owned by plaintiff Molinari when the vehicle was involved in a multivehicle accident.  As a result of the accident, the plaintiffs were named as defendants in a pesonal injury action (the underlying action).  Plaintiffs subsequently commenced this action against GEICO, seeking a judgment declaring that, pursuant to an insurance policy issued to Bonavita's mother, GEICO is obligated to defend and indemnify plaintiffs in the underlying action. The plaintiffs alleged that Bonavita's use of Molinari's vehicle qualified for "temporary substitute auto" or "non-owned auto" coverage under the policy.

In lieu of answering, GEICO moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint, contending that the plaintiffs were not entitled to coverage under the policy because, among other things, the vehicle being driven by Bonavita on the date of the accident was neither a "temporary substitute auto" nor a "non-owned auto" as defined in the policy. In support of its motion, GEICO submitted, among other things, an affidavit of its claims examiner, an affidavit of its attorney, a letter sent to GEICO from the plaintiffs' counsel, a letter from GEICO disclaiming coverage, a copy of the GEICO policy, and policy "declaration sheets" issued by GEICO during the relevant period. Plaintiffs opposed the motion and submitted, among other things, an affidavit of Bonavita, who averred that he is the son of GEICO's policyholder and resided at her home at the time of the accident.  Supreme Court denied the motion, and GEICO appealed.

In AFFIRMING the denial of GEICO's motion to dismiss, the Second Department reiterated what kind of evidence constitutes "documentary evidence" under subdivision 1 of CPLR 3211(a):

A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) on the ground that a defense is founded on documentary evidence may be appropriately granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326; Leon v Martinez, 84 NY2d 83, 88; Rodolico v Rubin & Licatesi, P.C., 114 AD3d 923, 924). "[T]o be considered documentary,' evidence must be unambiguous and of undisputed authenticity" (Fontanetta v John Doe 1, 73 AD3d 78, 86; see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714). "[J]udicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper case" (Fontanetta v John Doe 1, 73 AD3d at 84-85 [internal quotation marks omitted]; see Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714). Affidavits, deposition testimony, and letters are not considered documentary evidence within the intendment of CPLR 3211(a)(1) (see Rodolico v Rubin & Licatesi, P.C., 114 AD3d at 925; Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714).  

*  *  *  *  * 

Here, the affidavits and letters submitted by GEICO in support of its motion did not constitute documentary evidence within the intendment of CPLR 3211(a)(1) (see County of Westchester v Unity Mech. Corp., 165 AD3d at 885; Attias v Costiera, 120 AD3d 1281). Moreover, the GEICO insurance policy and declaration sheets failed to show that the plaintiffs were not, as they alleged in the complaint, entitled to coverage under the temporary substitute auto and/or non-owned auto provisions of the GEICO policy. Therefore, GEICO's submissions did not utterly refute the plaintiffs' allegations or conclusively establish a defense as a matter of law (see 25-01 Newkirk Ave., LLC v Everest Nat. Ins. Co., 127 AD3d 850; AGCS Marine Ins. Co. v Scottsdale Ins. Co., 102 AD3d 899).

An insurance policy is a contract, but the policy and policy declarations by themselves did not "utterly refute" the complaint's allegations and establish that plaintiffs were not entitled to coverage under the GEICO policy.  While I certainly understand an insurer's desire for the earliest possible exit from an insured's DJ or breach of contract action, this case is another example of how challenging it is for an insurer to get a lawsuit dismissed on a substantive coverage defense before answering the complaint.