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FILED: KINGS COUNTY CLERK 07/29/2019 09:52 AM INDEX NO. 510798/2018
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STATE OF NEW YORK
SUPREME COURT COUNTY OF KINGS
_______ _____________________ ___
ATLANTIC CA5UALTY INSURANCE Index No.: 510798/2018
COMPANY,
Plaintiff,
-against-
NOTICE OF ENTRY
EASTERN FRUIT & VEGETABLES, INC.,
Defendant.
____________________ ____________ _____________________
PLEASF)TAKE NOTICE that the within is a copy of an Order on Motion entered in
this action on the 15th day of July, 2019, in the office of the Clerk of the County of Kings.
Dated: July 29, 2019
Muditha Halliyadde, Esq.
RELIN GOLDSTEIN & CRANE LLP
Attorneys for Plaintiff
28 E. Main Street, Suite 1800
Rochester, New York 14614
Telephone: (585) 325-6202
TO: L. BLAKE MORRIS, ESQ.
1214 COkTELYOU ROAD
BROOKLYN, NEW YORK 11218
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At an IAS Term, Part 81 of the Supreme Court
of the State of New York, held in and for the
County of Kings, at the Courthouse, at Civic
2nd
Center, Brooklyn, New York., on the day
of July 2019.
P R E S E N T
HON. CARL J. LANDICINO,
Justice
- ---- - ---- - - -- - -- - - -- - ---- - - ----- - - - X
ATLANTIC CASUALTY INSURANCE COMPANY,
. Index No. 51079972018
Plaintiff,
DECISION AND ORDER
- against -
EASTERN FRUIT AND VEGETABLES, INC., Motion Seq. #1 and #2
Defendants.
-- ------- ---- ------- - --------- -- - - - - X
The following papers numbered 1 to 8 read herein: Papers Numbered
Notice of Motion/Order to Show Cause/
Petition/Cross Motion and
Affidavits (Affirmations) Annexed 1-3 4-6
Opposing Affidavits (Affirmations) 5-6 7
Reply Affidavits (Affirmations) 7
Supplemental Affirmation 8
Plaintiff, Atlantic Casualty Insurance Company (Atlantic), in this action for an
account stated and breach of contract, moves, pursuant to CPLR 3212, for an order striking
the answer o defendant Eastern Fruit and Vegetables, Inc. (Eastern), dismissing all
counterclaims and granting it summary judgment. Eastern cross-moves to dismiss the
1312(a).1
complaint, pursuant to CPLR3211 (a)(1) and Business Corporations Law(BCL) §
'
While Eastern also sought a stay, pursuant to CPLR 8502 and 8503, that branch of the
cross m.otion has been rendered moot because Atlantic has posted $500.00 as security for costs.
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Background
On May 24, 2018, Atlantic, a North Carolina corporation engaged in the insurance
business, commenced this action against Eastern by filing a summons and a complaint
York"
alleging that it "is duly authorized to issue policies of insurance in the State of New
(complaint at ¶ 1). The complaint further alleges that Atlantic, which "provided certain
commercial general liability insurance coverage"to Eastern, is entitled to recover $93,141.09
for the unpaid principal balances due on two insurance policies: (1) $69,903.09 under policy
L I46001424-1, and (2) $23,238.00 under policy L146001424-2 (id at ¶ 3). The complaint
asserts three causes of action. Breach of the insurance policies, unjust enrichment and an
account stated.
On or about June 29, 2018, Eastern interposed an answer in which it denied the
material allegations in the complaint and asserted affirmative defenses, including: (1)
Atlantic is unlicenced to issue insurance policies in New York and fails to allege licensing
authority in another jurisdiction (second affirmative defense), and (2) Atlantic's incapacity
to commence Amd maintain this action (sixth affirmative defense). Eastern also asserted a
counterclaim alleging that it "request[s] reasonable attorney[']s fees in defending this
action."
Atlantic now moves for summary judgment seeking the sum of $93,141.04 that is
allegedly due and owing on the two insurance policies that it issued to Eastern. In support
of its motion, Atlantic submits the affidavit of Suzanne Parrish, its premium audit manager,
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who explains that, pursuant to the terms of the insurance policies, premium audits were
conducted revealing an increase in policy exposure, which resulted in increased premiums.
According to Parrish, Eastern failed to pay the increased premiums, and consequently, policy
L146001424-2 was cancelled. Notably, while Atlantic seeks to collect premiums based on
the insurance policies, Atlantic fails to annex copies of those insurance policies to its moving
papers.
Eastern opposes Atlantic's summary judgment motion and cross-moves to dismiss the
complaint. Eastern submits the affidavit of Asif Jhangir (Jhangir), its president, who attests
that Eastern had a general liability insurance policy with Atlantic for six years and that
Eastern paid an annual premium of approximately $7,000. However, in July 2017, Atlantic
notified Jhangir that Eastern's policy was audited and its premiums would be increased.
Eastern denies knowledge of Atlantic's rights under the insurance policy to conduct an audit
and increase premiums, and asserts that Atlantic failed to specifically plead the terms of the
policy or attach a copy of the policy to its complaint. Eastern further contends that Atlantic
cannot prevail on its summary judgment motion because it failed to submit a copy of the
insurance policy for the court's consideration.
Eastern, in support of its cross motion to dismiss, argues that Atlantic lacks capacity
to maintain thÍs action because:
"[a]fter a thorough search of both the New York State Department of
State Corporation Filing database, and public records maintained by the
New York State Department of Financial Services, plaintiff is neither
registered to do business in the State ofNew York nor licensed to write
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York."
insurance policies in the State of New
Eastern thus contends that Atlantic, a foreign corporation that does business in New York
status,"
and "makes no allegations regarding its corporate lacks capacity to commence and
maintain this action, pursuant to BCL § 1312 (a).
business'
Atlantic, in opposition to the cross motion, argues that it "was 'not doing
1312."
in New York, and therefore [is] not subject to . . . Business Corporation Law §
Atlantic also submits a supplemental affidavit from Parrish attesting that:
"Plaintiff is an Excess and Surplus lines insurance company and [its]
behalf."
appointed general agents issue policies on [its]
"Plaintiff was incorporated in the State ofNorth Carolina in October of
1983. Plaintiff has been eligible to transact surplus lines business in
."
New York since October 24, 2002 . .
"The Excess Line Association of New York lists Atlantic Casualty
Insurance Company as a Foreign Insurer in the state ofNY as shown in
."
the report annexed hereto . .
Essentially, Atlantic seemingly argues that as a member of the Excess Line Association of
ANY)2
New York (EI it is statutorily authorized to transact surplus lines business in New
York through an excess line broker, and thus, it has capacity to maintain this action.
2
ELANy is "a legislatively created advisory association under the supervision of the
."
Department of Financial Services (DFS) . . and "was created . . . pursuant to Insurance Law §
2130 (a), in order to facilitate compliance with the many filing and record keeping requirements
."
for excess line Brokers . . (Excess Line Assn. of N.Y (ELANY) v Waldorf & Assoc., 30 NY3d
119, 121-122 [2017]).
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Discussion
(1)
Eastern's Cross Motion to Dismiss
"Business corporations . . . are creatures of statute and, as such, require statutory
sued"
authority to sue and be (Cmty. Bd. 7 of Borough of Manhattan v Schafer, 84 NY2d
148, 155 [199%]). BCL § 1312 (a) provides, in relevant part:
"[a] foreign corporation doing business in this state without authority
shall not maintain any action or special proceeding in this state unless
and until such corporation has been authorized to do business in this
state and it has paid to the state all fees and taxes imposed under the tax
."
law or any related statute . . (emphasis added).
Atlantic, an excess and surplus lines insurance company incorporated in North
"eligible"
Carolina, contends that it has been to transact surplus lines business in New York
agents"
through "appcinted since 2002, as a listed member of ELANY. However, as the
Court of Appeals noted, "[e]xcess line insurance policies are issued by foreign insurers not
state" 'advisory'
authorized to do business in this and "ELANY was created as an
association, pursuant to Insurance Law § 2130 (a), in order to facilitate compliance with the
brokers"
many filing and record keeping requirements for excess line (Excess Line Assn. of
N.Y. (ELANY v. Waldorf& Assocs., 30 NY3d at 121-122 [emphasis added]). Importantly,
Insurance Law § 2130, by which ELANY was created, does not reference BCL § 1312 (a)
or specifically grant ELANY members the authority to maintain an action in the State ofNew
York.
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..
Based on the plain language of BCL § 1312 (a), Atlantic's capacity to maintain this
business"
action appareritly turns on whether or not Atlantic actually "does in New York.
This presents a question of fact that precludes dismissal at this juncture. Consequently,
Eastern's cross motion to dismiss the complaint, pursuant to BCL § 1312 (a), is denied.
(2)
Atlantic's Summary Judgment Motion
Summaryjudgment is a drasticremedy and should be granted only when it is clear that
no triable issues of fact exist (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]).
The moving party bears the burden of prima facie showing its entitlement to summary
judgment as a matter of law by presenting evidence in admissible fonn demonstrating the
absence of any material issue of fact (see CPLR 3212 [b] Giuffrida v Citibank Corp., 100
NY2d 72 [2003]). Failing to make that showing requires denying the motion, regardless of
the adequacy of the opposing papers (see Vega v Restani Constr. Corp., 18 NY3d 499, 502
[2012] ; Ayotte v Gervasio, 81 NY2d 1062 [1993]).
Here, Atlantic failed to establish a prima facie case, and is not entitled to summary
judgment awarding it unpaid premiums under the terms of the insurance policy, because it
failed to annek a copy of the applicable insurance policy to its motion papers.
However, that branch of Atlantic's summary judgment motion seeking to dismiss
Eastern's counterclaim. seeking an award of attorney's fees is granted. "Under the general
attorneys'
rule in New York, fees are deemed incidental to litigation and may not be
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parties"
recovered unless supported by statute, court rule or written agreement of the
( Flemming v Barnwell Nursing Home & Health Facilities, inc., 15 NY3d 375, 379 [2010] ;
see also Hooper Assocs., Ltd v AGS Computers, Inc., 74 NY2d 487, 491 [1989][holdingthat
"(u)nder the general rule, attorney's fees are incidents of litigation and a prevailing party may
not collect them from the loser unless an award is authorized by agreement between the
parties, statute or court rule"] ; Rosenthal v Rosenthal, 151 AD3d 773, 774 [2017] [same]).
Accordingly, it is hereby
ORDERED, that the branch of Atlantic's summary judgment motion seeking to dismiss
Eastern's counterclaim is granted, the counterclaim is hereby dismissed, and Atlantic's summary
judgment motien is otherwise denied; and it is further
ORDERED that defendant's cross motion to dismiss the complaint is denied.
This constitutes the decision and order of the court.
ENTER
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