Allianz Ins. Co. v. Lerner, CV 02-1880.
| Decision Date | 17 February 2004 |
| Docket Number | No. CV 02-1880.,CV 02-1880. |
| Citation | 305 F.Supp.2d 191 |
| Parties | ALLIANZ INSURANCE COMPANY, as subrogee of Mercedes Benz Credit Corporation, Plaintiff, v. Regina LERNER, Isabella Lerner and Dimitry Lerner, Defendants. Regina Lerner, Isabella Lerner and Dimitry Lerner, Third Party Plaintiffs, v. Frank Merlino, Esq., Robert P. Tusa, Esq., and Allstate Insurance Company, Third Party Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Ginsberg, Becker & Weaver, LLP, By David M. Ginsberg, New York City, for Plaintiff.
Alan Jay Martin, New York City, for Defendants/Third Party Plaintiffs.
Lewis, Johs, Avallone & Kaufman, LLP, By Christine Malafi, Melville, NY, for Third Party Defendant.
In this action Plaintiff Allianz Insurance Company ("Allianz") appears as subrogee to Mercedes Benz Credit Corporation ("MBCC"). The claim of Allianz arose out of an accident involving a Mercedes-Benz leased by MBCC to Defendants Regina and Isabella Lerner. Specifically, Allianz sought contractual indemnification from Defendants in the amount of $340,000. The damages sought represent the amount spent by MBCC in settlement of a personal injury lawsuit filed after an accident involving the leased car (the "Vehicle"). The claim of Allianz has been disposed of by way of a memorandum and order of this court granting summary judgment to Allianz. Thus, this court has held Defendants liable to Allianz on its contractual claim of indemnification.
The court notes that the indemnification claim arose from the lease agreement between Mercedes-Benz and Defendants. Pursuant to that agreement, the lessees were obligated to Mercedes-Benz for any amount that the company was deemed liable as a result of the operation of the Vehicle. Since the Vehicle was leased, and not purchased, Mercedes remained the owner and was therefore liable for injuries resulting from use of the Vehicle pursuant to the New York State Vehicle and Traffic Law. Although the lease agreement obligated the lessees to obtain liability insurance in the amount of $100,000, that amount proved to be inadequate to cover the injuries associated with the accident that led to this litigation. Like many consumers who lease cars, Defendants may have been unaware of the extent of their exposure and were under-insured when the need for insurance arose. Unfortunately for Defendants, these matters were likely not taken into consideration when the lease was entered into. The court is powerless to change the parties' lease agreement and therefore has held Defendants liable to indemnify Mercedes-Benz. The Court notes these factual circumstances, however, in the hope that more consumers will be aware of the extent of their potential liability when entering into car rental and lease agreements. In any event, the court turns now to the pending motion.
Remaining for adjudication is the third-party action commenced by Defendants. That action names as third-party defendants Allstate Insurance Company ("Allstate"), the insurance company that represented Regina Lerner in the settled lawsuit. Also named as third-party defendants are Frank Merlino, Esq. and Robert Tusa, Esq. the two attorneys who represented Lerner in the settled personal injury action (the "Attorneys").
Presently before the court is the motion of third-party defendants for summary judgment on the third-party action. For the reasons set forth below, the motion is granted.
The facts surrounding this matter have been set forth in detail in the prior opinion in this matter, familiarity with which is assumed. For purposes of this motion it is important only to note the facts that follow.
In June of 1988, Regina Lerner was driving the Vehicle and became involved in an accident in which Andrew Baron, an infant, sustained injuries. Robert Baron, Andrew Baron's father, was the driver of the car in which his son was a passenger. A lawsuit arising from that accident was commenced in September of 1998 in New York State Supreme Court, County of Nassau (the "State Court Litigation"). Robert Baron and Regina Lerner were named in the State Court Litigation as negligent drivers. MBCC was sued as the owner of the Vehicle, pursuant to the New York State Vehicle and Traffic Law. At the outset, Regina Lerner and MBCC were both represented by the Attorneys.
When it became clear that a $100,000 insurance policy obtained by Regina Lerner might not be sufficient to cover a possible damage award, MBCC retained its own counsel and the Attorneys continued to defend the Lerners.1 Ultimately, the State Court Litigation was settled. The total amount of the settlement was $495,000. Robert Baron's liability was apportioned at $55,000. Allstate paid $100,000 of the settlement and $340,000 was paid by MBCC. The $100,000 payment by Allstate represented the total coverage limit under Allstate's policy with Regina Lerner.
Three stipulations of discontinuance were executed to effectuate the settlement of the State Court Litigation. Each of these stipulations referred to discontinuance only of the personal injury action against each of the three named defendants — Robert Baron, Regina Lerner and MBCC. No stipulation mentioned the settlement of any claim that might be later asserted by MBCC against Regina Lerner.
The third-party complaint was commenced by all three defendants in this action. Thereafter, it was discontinued by defendants Isabelle and Dimitri Lerner. Accordingly, the sole remaining third-party plaintiff is Regina Lerner ("Lerner"). Lerner alleges a cause of action against Allstate and a separate cause of action against the Attorneys. The claim against Allstate alleges that the company was obligated to defend Lerner in this action commenced by Allianz. According to Lerner, this subrogation action is covered by the policy of automobile insurance issued by Allstate to Lerner. The cause of action against the Attorneys alleges legal malpractice in connection with the handling of the State Court Litigation.
As noted above, the motion presently before the court is that of Allstate and the Attorneys for summary judgment on the third party complaint. Allstate seeks summary judgment on the ground that this subrogation action is a breach of contract claim, based upon a lease, that does not fall within the automobile policy issued to Lerner. The Attorneys seek summary judgment on the legal malpractice claim on the grounds that Lerner cannot prove that any action on the part of the Attorneys departed from the required standard of care. It is further argued that Lerner cannot show that any act or omission by the Attorneys was the proximate cause of any injury claimed. After outlining the applicable law, the court will turn to the merits of the parties' motions.
A motion for summary judgment is properly granted only if the court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FRCP 56(c); Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party seeking judgment bears the burden of demonstrating that no issue of fact exists. McLee v. Chrysler Corp. 109 F.3d 130, 134 (2d Cir.1997). However, when the nonmoving party fails to make a showing on an essential element of its case with respect to which it bears the burden of proof, summary judgment will be granted. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party resisting summary judgment must not only show a disputed issue of fact, but it must also be a material fact in light of substantive law. Only disputed facts that "might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 242, 106 S.Ct. 2505.
An insurance company's duty to defend arises when the allegations against an insured "potentially give rise to a covered claim ...." Frontier Insulation Contractors, Inc. v. Merchants Mut. Ins. Co., 91 N.Y.2d 169, 175, 667 N.Y.S.2d 982, 984, 690 N.E.2d 866 (1997). The duty is triggered if "the allegations in a complaint, liberally construed, suggest a reasonable possibility of coverage, or when the insurer has actual knowledge of facts establishing such a reasonable possibility." City of New York v. Insurance Corp. of New York, 305 A.D.2d 443, 443, 758 N.Y.S.2d 817, 818 (2d Dep't.2003). An insurer will be relieved of the duty to defend only if it is "concluded, as a matter of law that there is no possible factual or legal basis on which [the insurer] might eventually be held to be obligated to indemnify [the insured] under any provision of the insurance policy." Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d 419, 424, 488 N.Y.S.2d 139, 142, 477 N.E.2d 441 (1985).
The duty to indemnify is narrower than the duty to defend. The former duty will arises only if the claim for which the insured has been judged liable is within the policy's coverage. Frontier Insulation, 91 N.Y.2d at 178, 667 N.Y.S.2d at 986, 690 N.E.2d 866. Thus, while the duty to defend is "measured against the possibility of a recovery, `the duty to pay is determined by the actual basis for the insured's liability to a third person.'" Frontier Insulation, 91 N.Y.2d at 178, 667 N.Y.S.2d at 986, 690 N.E.2d 866, quoting, Servidone Constr. Corp. v. Security Ins. Co., 64 N.Y.2d at 424, 488 N.Y.S.2d at 142, 477 N.E.2d 441.
While the parties have argued this motion from both a "duty to defend" and "duty to indemnify perspective," it appears to the court that the proper analysis is the narrower duty to indemnify standard. The rights and obligations...
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Allianz Ins. Co. v. Lerner
...In February 2004, the district court granted Allstate's and the Attorneys' motions and dismissed the third-party complaint. Allianz II, 305 F.Supp.2d at 198. In analyzing Lerner's third-party claim against Allstate, the court held that Allianz's claim against Lerner was "not within the scop......