Carlson v. Am. Int'l Grp., Inc.

• Decision Date: 20 November 2017
• Citation: 67 N.Y.S.3d 100,30 N.Y.3d 288,89 N.E.3d 490
• Parties: Michael J. CARLSON, Sr., Individually and as Administrator of the Estate of Claudia D'Agostino Carlson, Deceased, and as Assignee of William Porter, Appellant, v. AMERICAN INTERNATIONAL GROUP, INC., et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

30 N.Y.3d 288
89 N.E.3d 490
67 N.Y.S.3d 100

Michael J. CARLSON, Sr., Individually and as Administrator of the Estate of Claudia D'Agostino Carlson, Deceased, and as Assignee of William Porter, Appellant,
v.
AMERICAN INTERNATIONAL GROUP, INC., et al., Respondents.

Court of Appeals of New York.

Nov. 20, 2017.

67 N.Y.S.3d 103

Magavern Magavern Grimm LLP, Buffalo (Edward J. Markarian of counsel), and Brown Chiari LLP, Buffalo (James E. Brown, Angelo S. Gambino and Timothy Hudson of counsel), for appellant.

Hodgson Russ, LLP, Buffalo (Kevin D. Szczepanski and Peter H. Wiltenburg of counsel), for American International Group, Inc. and others, respondents.

Rubin, Fiorella & Friedman LLP, New York City (Paul Kovner and Aaron F. Fishbein of counsel), for American Alternative Insurance Co., respondent.

Wilson, Elser, Moskowitz, Edelman & Dicker LLP, New York City (Patrick J. Lawless of counsel), for DHL Express (USA), Inc., respondent.

Suzanne Y. Mattei, General Counsel, New York State Trial Lawyers Association, New York City, for New York State Trial Lawyers Association, amicus curiae.

Chaffetz Lindsey, LLP, New York City (Charles J. Scibetta, Steven C. Schwartz and Lidia Helena S. Rezende of counsel), for American Insurance Association and another, amici curiae.

Hancock Estabrook, LLP, Syracuse (Alan J. Pierce of counsel), and Andrew Smiley, New York State Academy of Trial Lawyers, Albany, for New York State Academy of Trial Lawyers, amicus curiae.

OPINION OF THE COURT

WILSON, J.

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Plaintiff Michael Carlson, individually and in his capacity as administrator of his deceased wife's estate and as assignee of William Porter, commenced this action pursuant to Insurance Law § 3420(a)(2) to collect on certain insurance policies issued to DHL Worldwide Express, Inc. by National Union Fire Insurance Co. and American Alternative Insurance Co. (AAIC). Mr. Carlson previously had obtained a judgment against MVP Delivery and Logistics, Inc. and William Porter (see Carlson v. Porter, 53 A.D.3d 1129, 861 N.Y.S.2d 907 [4th Dept.2008], lv denied 11 N.Y.3d 708, 868 N.Y.S.2d 601, 897 N.E.2d 1085 [2008] ). On appeal, we consider whether Mr. Carlson has sufficiently pleaded that MVP is an "insured" under DHL's policies, and whether the policies fall within the purview of Insurance Law § 3420 as policies "issued or delivered" in New York. We hold that dismissal of the first cause of action pursuant to Insurance Law § 3420(a)(2) and (b) was improper as to National Union and AAIC. Whether MVP was an "insured" under DHL's policies presents a question of fact to be resolved

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by the trier of fact. Additionally, the meaning of "issued or delivered" is informed by our decision in Preserver Ins. Co. v. Ryba, 10 N.Y.3d 635, 862 N.Y.S.2d 820, 893 N.E.2d 97 (2008), and thus, section 3420 encompasses situations where both insureds and risks are located in this state.

I.

Claudia Carlson was killed when a truck painted with DHL's logo, owned by MVP and driven by William Porter, an employee of MVP, crossed the double-yellow divider and hit her car head on. Prior to the accident, Mr. Porter had driven the truck home on a scheduled break, when he

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learned that his son had been in an accident. Mr. Porter drove the truck to the accident site, and while driving the truck to retrieve a tool to repair his son's vehicle, Mr. Porter veered into Mrs. Carlson's car, killing her. A jury awarded her husband, individually and as administrator of her estate, $20 million against MVP, Mr. Porter and DHL. The Appellate Division set aside the verdict against DHL and dismissed the complaint against it, concluding that DHL was not vicariously liable under the doctrine of respondeat superior. The court also found damages to be excessive, and Mr. Carlson stipulated to a reduced judgment of $7.3 million. MVP's insurer paid Mr. Carlson approximately $1.1 million, and Mr. Porter assigned to Mr. Carlson whatever rights Mr. Porter had to any other insurance coverage.

At the time of the accident, DHL and MVP were parties to a cartage agreement, pursuant to which MVP used its fleet of trucks and employees to perform DHL's package delivery services in Western New York. DHL had three insurance policies relevant here: (1) a $3 million primary policy issued by National Union, which included "hired auto" coverage insuring DHL, its employees, and "[a]nyone else while using with your permission a covered ‘auto’ you own, hire or borrow"; (2) a $2 million excess insurance policy with AAIC, with the exact same coverage as the National Union policy; and (3) a $23 million umbrella policy with National Union, which covered vehicles "hired by [DHL] or on [DHL's] behalf and used with [DHL's] permission." American International Group, Inc. and AIG Domestic Claims, Inc. (collectively, AIG) did not issue any relevant policy to DHL.

Mr. Carlson commenced this action against National Union, AAIC, AIG, and DHL, alleging five causes of action. The first asserted a claim under Insurance Law § 3420(a)(2) and (b),

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against National Union, AAIC and AIG, to satisfy the outstanding judgment. The second, third, and fourth causes of action asserted damages against National Union, AAIC and AIG for misrepresentations, bad faith refusal to settle, and violations of General Business Law § 349, respectively. The fifth cause of action sought damages against DHL and AIG for conspiracy.

Defendants moved to dismiss the complaint in its entirety. As to the first cause of action, AAIC moved to dismiss on the ground that section 3420 did not permit a claim against it because its policy, initially issued by it to DHL's predecessor, Airborne Inc. (headquartered in Washington), and later assumed by DHL (headquartered in Florida), was not "issued or delivered" in New York. Supreme Court denied that motion, and allowed discovery to proceed on the issue of coverage. After limited discovery had occurred, Supreme Court granted the motions and cross motion to the extent of dismissing causes of action 2, 3 and 5 of the complaint, but refused to dismiss the first and fourth causes of action.

The Appellate Division dismissed Mr. Carlson's General Business Law § 349 claim as to all remaining defendants (see Carlson v. American Intl. Group, Inc., 130 A.D.3d 1479, 1482, 12 N.Y.S.3d 715 [4th Dept.2015] ). The Appellate Division also dismissed the first cause of action. As to AIG, the Appellate Division concluded that because the two AIG entities established that they are not insurers, no section 3420 claim lay against them (see id. at 1480, 12 N.Y.S.3d 715 ). The Appellate Division held that Mr. Carlson could not state a claim against National Union because (a) the MVP vehicle was not a "hired automobile" and (b) DHL could not grant MVP permission to use it (see id. at 1481, 12 N.Y.S.3d 715 ). In a companion appeal, the

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Appellate Division determined that the AAIC policy was not issued or delivered in New York and dismissed the first cause of action against AAIC (see Carlson v. American Intl. Group, Inc., 130 A.D.3d 1477, 1477–1478, 16 N.Y.S.3d 637 [4th Dept.2015] [concluding that the parties and Supreme Court had "improperly conflated the phrase ‘issued or delivered’ with ‘issued for delivery’ "] ).

II.

On a motion to dismiss for failure to state a cause of action, the complaint must be liberally construed, and courts must provide a plaintiff with every favorable inference (see 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152, 746 N.Y.S.2d 131, 773 N.E.2d 496 [2002] ; Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ; CPLR 3026 ;

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see also Held v. Kaufman, 91 N.Y.2d 425, 432, 671 N.Y.S.2d 429, 694 N.E.2d 430 [1998] ["every favorable inference must be afforded the facts alleged in the complaint and in the various motion papers submitted by (the plaintiff)"] ). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" ( EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19, 799 N.Y.S.2d 170, 832 N.E.2d 26 [2005] ).

"Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. In assessing a motion under CPLR 3211(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and the criterion is whether the proponent of the pleading has a cause of action, not whether

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