Tuesday, May 13, 2008

New Yorker Injured in Maryland MVA by Vehicle Insured in Virginia

Perkins v. Allstate Ins. Co.
(2nd Dept., decided 5/6/2008)

This is the second of two decisions isssued by the Second Department on the same day involving New York Insurance Law § 3420(a)(2), which permits an injured party to sue the insurer of the tortfeasor insured once the injured party has obtained a money judgment against her that remains unsatisifed for more than 30 days after presentment to the insurer. This case is a bit more instructive than Lopez (post below), in that it highlights and discusses coverage defenses that may be applicable to such statutory claims or causes of action.

Perkins, a New York resident, was injured in a Maryland auto accident. He sued Shoffner, also a New York resident, as the operator of the offending vehicle, and Riggin Master, a New York corporation as the owner of the vehicle. The vehicle was insured under a policy issued by Allstate to "Lucy Carr", a Virginia resident. Perkins never sued Carr.

Shoffner and Riggin Master did not answer or appear in Perkins' personal injury action, and he took a default judgment against them, which remained unsatisifed for more than 30 days. Perkins then commenced this action against Allstate pursuant to Insurance Law § 3420(a)(2) for payment of the unsatisfied judgment. Allstate counterclaimed and moved for summary judgment on the ground of lack of coverage.

In REVERSING the lower court's denial of Allstate's motion and remitting this matter back to Supreme Court for entry of a judgment declaring that Allstate is not obligated to satisfy the judgment against the defendants in the underlying action, the Second Department held:

The judgment entered on default in the underlying action is conclusive for res judicata purposes as to any matters actually litigated or that might have been litigated therein (see 83-17 Broadway Corp. v Debcon Fin. Servs., Inc. 39 AD3d 583; Rizzo v Ippolito, 137 AD2d 511). In the first instance, no judgment was entered in that action against Carr, [Allstate]'s named insured who, as aforesaid, was not operating the vehicle on the day of the accident. In addition, the underlying action was conclusive as to the identity of the vehicle's owner (Riggin Master) and the vehicle's operator (Robert Shoffner), neither of whom were named insureds under the policy issued by [Allstate] to Carr.

Moreover, although the policy provided coverage for "non-owned automobiles," the only individuals covered thereunder were the named insureds, relatives who reside in the same household as the named insureds (hereinafter a residing relative), and "any other person or organization not owning or hiring the automobile, but only with respect to his or its liability because of acts or omissions of" a named insured or residing relative. The defendants against whom the judgment was entered in the underlying action do not fit any of the criteria for "Persons Insured" under the policy.

Furthermore, the plaintiff's contention that the defense of lack of coverage was invalid because [Allstate] failed to issue a timely disclaimer is without merit. Where an insurer is entitled to deny a claim based on an absence of coverage, its failure to timely disclaim coverage does not preclude it from denying liability on that ground (see Insurance Law § 3420[d]; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; State Farm Fire & Cas. Co. v Horton, 37 AD3d 820). Moreover, Insurance Law § 3420(d) does not apply to out-of-state accidents (see Matter of Transportation Ins. Co. v Cafaro, 295 AD2d 618).

Plaintiffs' New York judgment was, therefore, uncollectible under the Allstate policy.

Editor's Note: Does this sound like a case of possible rate evasion to anyone other than me? New York residents, an alleged New York corporation (which doesn't show up in the NYS Department of State's Corporation and Business Entity Database), a Maryland accident, and non-appearances by the New York defendants in a New York action. Lucy Carr, the British singer/model/actress? Or a pun for a fictitious insured from a more premium friendly state?

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