Alexander v. Stone

• Decision Date: 05 July 1974
• Citation: 357 N.Y.S.2d 271,45 A.D.2d 216
• Parties: James D. ALEXANDER, Individually and as father of Richard E. Alexander, an infant, Respondent, v. Earl STONE et al., Respondents, and Travelers Insurance Company, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 271

357 N.Y.S.2d 271

45 A.D.2d 216

James D. ALEXANDER, Individually and as father of Richard E Alexander, an infant, Respondent, v. Earl STONE et al., Respondents, and Travelers Insurance Company, Appellant.

Supreme Court, Appellate Division, Fourth Department.

July 5, 1974.

Adams, Brown, Starrett & Maloney, P.C., Buffalo, for appellant (Edmund S. Brown, Jr., Buffalo, of counsel)

Serotte, Hoffman, Serotte, Haley & Green, Buffalo, for respondents (F. Lambert Haley, Buffalo, of counsel).

Miller, Bouvier, O'Connor & Cegielski, Buffalo, for respondent State Farm Ins. Co. (John W. Cegielski, Buffalo, of counsel).

Before MARSH, P.J., and WITMER, SIMONS, GOLDMAN and DEL VECCHIO, JJ.

OPINION

WITMER, Justice.

Travelers Insurance Company (Travelers) appeals from a judgment declaring that State Farm Mutual Automobile Insurance Company (State Farm) was justified in disclaiming insurance coverage for its insured, Otis Mosley, because of his failure to cooperate in the defense of an action against him for injuries allegedly arising from the operation of his insured automobile, and further declaring that if plaintiffs' injuries were caused solely by Mosley's negligence, plaintiffs have a claim therefor against Travelers under the Uninsured Motorist Endorsement contained in the insurance policy (issued by Travelers) on the automobile of Earl Stone in whose vehicle plaintiffs were passengers when it was in collision with Mosley's automobile. This action for declaratory judgment was begun after plaintiffs received notice from State Farm of its disclaimer. Upon trial of the declaratory judgment action the following evidence was presented.

The accident occurred on April 14, 1968 and three days later Mosley reported the accident to his insurance agent and duly filed form MV--104, showing that State Farm was his insurer and that his address was 134 Best Street, Buffalo, New York. Mosely had only a third or fourth grade education and 'cannot read too well'. Over three months after the accident State Farm assigned a field claims representative to investigate it. He went to No. 162 Best Street, which was the address given to him but which was where Mosley had formerly lived. Finding no one there, he left his business card, requesting Mosley to contact him. Four months thereafter, on November 27, 1968 State Farm employed a law firm to represent it is the matter, and the firm promptly sent a registered letter to Mosley addressed to 134 Best Street, seeking his cooperation with respect to claims arising from the accident. The letter was returned, 'No Answer'. On January 10, 1969 the firm sent a follow-up letter to Mosley, advising him that State Farm had retained them; but they received no response. In June, 1969 the firm received from plaintiffs' counsel an affidavit of service of summons and complaint on Mosley, and in behalf of Mosley on June 23, 1969 the firm interposed an answer thereto. In October, 1969 the law firm moved for examination before trial of plaintiffs, to be held on December 1, 1969, and the firm sent an alert letter to Mosley advising him thereof and asking him to notify them by the enclosed return postal card of his availability. The card was not returned; the examination before trial was adjourned and another alert letter was sent by registered mail to Mosley on December 19, 1969; but it was returned unclaimed.

At the law firm's request State Farm then ordered a credit report of Mosley. That resulted on March 19 and 20, 1970 in an investigation which showed that Mosley resided at 134 Best Street and was employed at Hanna Furnace Corp. In July, 1970 State Farm again sent its field claims representative to contact Mosley, this time at 134 Best Street and this being two years after his first attempt to find Mosley. He found no one at home and again left a card. He received no response therefrom.

The negligence case was pretried in Supreme Court in December, 1970 and was transferred to Buffalo City Court for trial. State Farm's attorneys then filed in that court a demand for jury trial in behalf of Mosley.

On February 9, 1971 a private investigator was employed by the law firm to locate Mosley, and the latter was found residing at 166 Oxford Street. The investigator told Mosley that he represented a law firm employed by Mosley's insurance company and that he should contact that law firm. Mosley replied that since he had filed a report of the accident he did not feel that he had anything more to do. The law firm advised State Farm of this on March 16, 1971, and also sent a letter to 166 Oxford Street advising him that his failure to cooperate would result in a disclaimer by his insurer. No ersponse was received. On April 5, 1971 the firm sent a certified letter to Mosley reminding him of his insurer's right to disclaim and asking him to telephone the firm. The firm received a receipt from the post office signed by Mosley acknowledging that on April 8, 1971 he had received this letter; but he made no other response.

A month later, on May 11, 1971, nearly three years after he was first assigned to this matter, State Farm's filed claims representative and a lawyer from the retained law firm had an appointment to interview Mosley at his place of employment, Hanna Furnace Corp. They learned, however, that he was ill that day did not come to work, and the appointment was cancelled. The field claims representative made no further attempt to contact Mosley.

Later that month the law firm sent a letter to the Personnel Department of Hanna Furnace Corp. enclosing a letter for Mosley which warned him of a possible disclaimer. On June 8, 1971 an employee of the corporation delivered the letter to Mosley and read it to him. He advised Mosley to contact the law firm, and he also asked him why he had not done so before and Mosley answered that he had changed insurance companies and did not think that 'he had any continuing liability'. Mosley then telephoned the law firm and made an appointment to call at their office the next morning. Mosley testified that he went to the law office the next morning and talked with an attorney there who took a statement from him and said that they would contact him; but he did not hear from them again until September, 1972. The law firm acknowledged receiving Mosley's telephone call on June 8, 1971 but asserted that Mosley failed to appear for the appointment the next morning. On that same day, June 9, and again on June 21, 1971, however, the law firm recommended that State Farm disclaim under the policy, and on July 6, 1971 State Far sent a letter of disclaimer to Mosley and notified plaintiffs of its disclaimer. Nevertheless, on September 6, 1972 it sent a trial alert letter to Mosley, but it was returned makred, 'Moved. No forwarding address'.

Mosley testified that when the private investigator came to see him in February, 1971 he took a statement from him regarding the accident and told him not to speak to anyone about the case and that he would contact Mosley later.

Subdivision 5 of section 167 of the Insurance Law provides that when an insurer disclaims upon the ground of the insured's failure or refusal to cooperate, 'the burden shall be upon the insurer to prove such alleged failure or refusal to cooperate'. The burden of proving lack of cooperation is a heavy one, since a disclaimer penalizes the injured party for the alleged action of the insured and frustrates the New York policy that innocent victims of motor vehicle accidents be recompensed for injuries suffered by them (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 168, 278 N.Y.S.2d 793, 799, 225 N.E.2d 503, 507, citing Wallace v. Universal Ins. Co., 18 A.D.2d...