Preview
FILED: ERIE COUNTY CLERK 03/27/2018 01:41 PM INDEX NO. 801637/2018
NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 03/27/2018
STATE OF NEW YORK
SUPREME COURT : COUNTY OF ERIE
Christopher Palma
as parent and natural guardian of PLAINTIFF'S MEMORANDUM
Adrianna M. Palma, an infant OF LAW IN
OPPOSITION TO
Amber McCooey DEFENDANT, NYCM'S
as parent and natural guardian of MOTION TO DISCUSS
Adrianna M. Palma, an infant PLAINTIFF'S
COMPLAINT
Plaintiff,
v.
Index No. : 801637 / 2018
New York Central Mutual Fire Insurance Company
Kathleen Barone
Defendants.
Plaintiff's have commenced a declaratory judgment action against defendant, New York
Central Mutual Insurance Company (hereinafter NYCM) and defendant, Kathleen Barone seeking
a declaration that the policy of homeowner's insurance, which was issued to defendant, Kathleen
Barone, should cover the claim for damages for personal injuries sustained by the infant plaintiff in
the underlying personal injury action. At this time NYCM is providing a defense to defendant,
Kathleen Barone inthe underlying action. However, ithas disclaimed indemnification to defendant,
Kathleen Barone in connection with the underlying action. No judgment has been entered against
defendant, Kathleen Barone in the underlying action to date.
In lieu of an answer, NYCM has brought a Motion to Dismiss the Complaint pursuant to
CPLR §3211(a)(1), (3) and (7), essentially asserting that the plaintiff's Complaint in the declaratory
judgment action must be dismissed as (1) the plaintiffs are not parties to the NYCM insurance
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contract and cannot maintain a cause of action for a declaratory relief;and (2) plaintiffs lack standing
to bring a direct action against NYCM because they cannot satisfy the necessary statutory conditions
as they have not yet obtained a judgment against defendant, Kathleen Barone.
FACTS:
The underlying facts for this declaratory judgment action are essentially not in dispute. The
plaintiffs have commenced the underlying action against defendant, Kathleen Barone, seeking
damages for personal injuries for their daughter due to a dog bite incident. Defendant, Kathleen
Barone had knowledge of the vicious propensities of the dogs prior to the incident in the underlying
case. There is a likelihood of success in liability in the underlying case. NYCM has disclaimed
coverage with a reservation of rights and is currently defending defendant, Kathleen Barone, in the
underlying action, but has disclaimed coverage. Plaintiff's thereafter commenced this declaratory
judgment against NYCM seeking the Court's intervention to determine if NYCM's underlying
policy of insurance will be available to the plaintiff's in this case.
ARGUMENT:
Plaintiffs contend that they have standing to commence this action directly against NYCM
for a declaratory judgment. Insurance Law §3420 enables certain specified parties to maintain an
action against an insured to recover the amount of a judgment against an insured or his personal
representative. However, Insurance Law §3420 does not purport to govern declaratory judgment
(2"d
actions. See Abbott v. All City Insurance Company, et al.,214 AD2d 627, 625 NYS2d 587
Dept., 1995).
In the Abbott case, the Appellate Division held that in light of the large number of cases
permitting the maintenance of declaratory judgment actions by parties other than those who possess
judgments against the insured, the statute does not operate to bar declaratory judgment actions.
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Abbott supra @ 628. Rather, the Court held "itis well settled that a declaratory judgment is a proper
remedy when the record presents a real controversy, involving substantial legal interests, and it is
shown that a declaratory judgment would be useful (See Reliance Insurance Company v. Garsart
Building Corp., 122 AD2d 128 @ 131)". Further, the Court held that with reference to standing "a
party who is not privy to an insurance contract but would nevertheless stand to benefit from the
insurance policy may bring a declaratory action to determine whether the insurer owed a defense
and/or coverage under the policy (Costa v. Colonial Penn Insurance Company, 204 AD2d 591 @
592)."
Abbott supra @ 628.
(2nd
In Costa v. Colonial Penn Insurance Company, 204 AD2d 591, 612 NYS2d 617 Dept;
1994), the plaintiff decedent died as a result of injuries sustained in an automobile accident with
defendant driver. The plaintiff commenced a personal injury and wrongful death action against the
owner of the vehicle, a leasing company, and defendant driver. The owner of the vehicle was denied
coverage under the terms of itspolicy claiming that itspolicy limit was reduced by the amount of
the insurance required to be obtained pursuant to a lease agreement with the owner and therefore no
coverage was available for the plaintiff. The plaintiff thereafter commenced a declaratory judgment
action against the carrier. The carrier argued the plaintiff did not have standing because the plaintiff
had not obtained a judgment against itsinsured. The trialcourt granted plaintiff's Motion for
carrier'
Summary Judgment and declared thatthe carrier's policy afforded coverage and that the carrier was
obliged to indemnify the owner for any liability determined in the underlying action. The Appellate
Division affirmed, stating "a party who is not privy to an insurance contract, but would nevertheless
stand to benefit from the insurance policy may bring a declaratory judgment action to determine
whether the insurer owed a defense and/or coverage under the policy". Costa @ 592 citing Reliance
Insurance Company v. Garsart Building Corp., 122 AD2d 128. Moreover, a declaratory judgment
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action against insurers, including excess carriers, is permitted prior to a judgment where the
judgment likely to be recovered in the underlying action would amount to more than the excess floor
or the potential liability might well reach into the excess coverage. Citing State Farm Fire and
Casualty Company v. LiMauro, 183 AD2d 514, 518, Affirmed 65 NY2d 369, Farley v. State Farm
Regional Auto Insurance Company, 167 AD2d 861, Hollander v. Nationwide Mutual Insurance
Company, 60 AD2d 380.
plaintiffs'
Based upon the aforementioned cases, itis the position that they have standing to
commence this declaratory judgment action directly against NYCM. Further, based upon the facts
of the underlying action, itis clear that there is a likelihood of success on the merits.
WHEREFORE, itis respectfully requested that the defendant, NYCM's Motion to Dismiss
be denied in allrespects and that they be required to submit an Answer within thirty (30) days of the
Court's denial of their motion, together with such other and further relief as to the deems just
and proper.
DATED: Buffalo N ork
March ~~ , 2018
ward L. Smith, III, q.
DOLCE PANEPINTO, PC
Attorneys for Plaintiff
1260 Delaware Avenue
Buffalo, New York 14209
(716) 852-1888
TO: Jessica L. Foscolo
Kenney Shelton Liptak Nowak, LLP
Attorneys for Defendant - NYCM
The Calumet Building
233 Franklin Street
Buffalo, NY 14202
(716) 853-3801
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Preview
FILED: ERIE COUNTY CLERK 03/27/2018 01:41 PM INDEX NO. 801637/2018 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 03/27/2018 STATE OF NEW YORK SUPREME COURT : COUNTY OF ERIE Christopher Palma as parent and natural guardian of PLAINTIFF'S MEMORANDUM Adrianna M. Palma, an infant OF LAW IN OPPOSITION TO Amber McCooey DEFENDANT, NYCM'S as parent and natural guardian of MOTION TO DISCUSS Adrianna M. Palma, an infant PLAINTIFF'S COMPLAINT Plaintiff, v. Index No. : 801637 / 2018 New York Central Mutual Fire Insurance Company Kathleen Barone Defendants. Plaintiff's have commenced a declaratory judgment action against defendant, New York Central Mutual Insurance Company (hereinafter NYCM) and defendant, Kathleen Barone seeking a declaration that the policy of homeowner's insurance, which was issued to defendant, Kathleen Barone, should cover the claim for damages for personal injuries sustained by the infant plaintiff in the underlying personal injury action. At this time NYCM is providing a defense to defendant, Kathleen Barone inthe underlying action. However, ithas disclaimed indemnification to defendant, Kathleen Barone in connection with the underlying action. No judgment has been entered against defendant, Kathleen Barone in the underlying action to date. In lieu of an answer, NYCM has brought a Motion to Dismiss the Complaint pursuant to CPLR §3211(a)(1), (3) and (7), essentially asserting that the plaintiff's Complaint in the declaratory judgment action must be dismissed as (1) the plaintiffs are not parties to the NYCM insurance 1 of 4 FILED: ERIE COUNTY CLERK 03/27/2018 01:41 PM INDEX NO. 801637/2018 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 03/27/2018 contract and cannot maintain a cause of action for a declaratory relief;and (2) plaintiffs lack standing to bring a direct action against NYCM because they cannot satisfy the necessary statutory conditions as they have not yet obtained a judgment against defendant, Kathleen Barone. FACTS: The underlying facts for this declaratory judgment action are essentially not in dispute. The plaintiffs have commenced the underlying action against defendant, Kathleen Barone, seeking damages for personal injuries for their daughter due to a dog bite incident. Defendant, Kathleen Barone had knowledge of the vicious propensities of the dogs prior to the incident in the underlying case. There is a likelihood of success in liability in the underlying case. NYCM has disclaimed coverage with a reservation of rights and is currently defending defendant, Kathleen Barone, in the underlying action, but has disclaimed coverage. Plaintiff's thereafter commenced this declaratory judgment against NYCM seeking the Court's intervention to determine if NYCM's underlying policy of insurance will be available to the plaintiff's in this case. ARGUMENT: Plaintiffs contend that they have standing to commence this action directly against NYCM for a declaratory judgment. Insurance Law §3420 enables certain specified parties to maintain an action against an insured to recover the amount of a judgment against an insured or his personal representative. However, Insurance Law §3420 does not purport to govern declaratory judgment (2"d actions. See Abbott v. All City Insurance Company, et al.,214 AD2d 627, 625 NYS2d 587 Dept., 1995). In the Abbott case, the Appellate Division held that in light of the large number of cases permitting the maintenance of declaratory judgment actions by parties other than those who possess judgments against the insured, the statute does not operate to bar declaratory judgment actions. 2 of 4 FILED: ERIE COUNTY CLERK 03/27/2018 01:41 PM INDEX NO. 801637/2018 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 03/27/2018 Abbott supra @ 628. Rather, the Court held "itis well settled that a declaratory judgment is a proper remedy when the record presents a real controversy, involving substantial legal interests, and it is shown that a declaratory judgment would be useful (See Reliance Insurance Company v. Garsart Building Corp., 122 AD2d 128 @ 131)". Further, the Court held that with reference to standing "a party who is not privy to an insurance contract but would nevertheless stand to benefit from the insurance policy may bring a declaratory action to determine whether the insurer owed a defense and/or coverage under the policy (Costa v. Colonial Penn Insurance Company, 204 AD2d 591 @ 592)." Abbott supra @ 628. (2nd In Costa v. Colonial Penn Insurance Company, 204 AD2d 591, 612 NYS2d 617 Dept; 1994), the plaintiff decedent died as a result of injuries sustained in an automobile accident with defendant driver. The plaintiff commenced a personal injury and wrongful death action against the owner of the vehicle, a leasing company, and defendant driver. The owner of the vehicle was denied coverage under the terms of itspolicy claiming that itspolicy limit was reduced by the amount of the insurance required to be obtained pursuant to a lease agreement with the owner and therefore no coverage was available for the plaintiff. The plaintiff thereafter commenced a declaratory judgment action against the carrier. The carrier argued the plaintiff did not have standing because the plaintiff had not obtained a judgment against itsinsured. The trialcourt granted plaintiff's Motion for carrier' Summary Judgment and declared thatthe carrier's policy afforded coverage and that the carrier was obliged to indemnify the owner for any liability determined in the underlying action. The Appellate Division affirmed, stating "a party who is not privy to an insurance contract, but would nevertheless stand to benefit from the insurance policy may bring a declaratory judgment action to determine whether the insurer owed a defense and/or coverage under the policy". Costa @ 592 citing Reliance Insurance Company v. Garsart Building Corp., 122 AD2d 128. Moreover, a declaratory judgment 3 of 4 FILED: ERIE COUNTY CLERK 03/27/2018 01:41 PM INDEX NO. 801637/2018 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 03/27/2018 action against insurers, including excess carriers, is permitted prior to a judgment where the judgment likely to be recovered in the underlying action would amount to more than the excess floor or the potential liability might well reach into the excess coverage. Citing State Farm Fire and Casualty Company v. LiMauro, 183 AD2d 514, 518, Affirmed 65 NY2d 369, Farley v. State Farm Regional Auto Insurance Company, 167 AD2d 861, Hollander v. Nationwide Mutual Insurance Company, 60 AD2d 380. plaintiffs' Based upon the aforementioned cases, itis the position that they have standing to commence this declaratory judgment action directly against NYCM. Further, based upon the facts of the underlying action, itis clear that there is a likelihood of success on the merits. WHEREFORE, itis respectfully requested that the defendant, NYCM's Motion to Dismiss be denied in allrespects and that they be required to submit an Answer within thirty (30) days of the Court's denial of their motion, together with such other and further relief as to the deems just and proper. DATED: Buffalo N ork March ~~ , 2018 ward L. Smith, III, q. DOLCE PANEPINTO, PC Attorneys for Plaintiff 1260 Delaware Avenue Buffalo, New York 14209 (716) 852-1888 TO: Jessica L. Foscolo Kenney Shelton Liptak Nowak, LLP Attorneys for Defendant - NYCM The Calumet Building 233 Franklin Street Buffalo, NY 14202 (716) 853-3801 4 of 4