Bahnuk v. Countryway Ins. Co.

• Decision Date: 28 September 2021
• Docket Number: EFCA2019000970
• Parties: PAUL BAHNUK, Plaintiff, v. COUNTRYWAY INSURANCE COMPANY, Defendant.
• Court: New York Supreme Court

2021 NY Slip Op 32052(U)

PAUL BAHNUK, Plaintiff, v. COUNTRYWAY INSURANCE COMPANY, Defendant.

EFCA2019000970

Supreme Court, Broome County

September 28, 2021

Unpublished Opinion

At a Motion Term of the Supreme Court of the State of New York held in and for the Sixth Judicial District at the Broome County Courthouse, Binghamton, New York, on the 8th day of July 2021, by Microsoft Teams.

Counsel for Plaintiff: ANTHONY R. MARTOCCIA, Esq. Stanley Law Offices

Counsel for Defendant: ALAN J. PIERCE, Esq. Hancock Estabrook, LLP

PRESENT: HON. EUGENE D. FAUGHNAN Justice Presiding

DECISION AND ORDER

EUGENE D. FAUGHNAN. J.S.C.

Plaintiff Paul Bahnuk ("Bahnuk") has filed a motion seeking summary judgment on the basis that Defendant Country way Insurance Company ("Country way") failed to properly disclaim coverage pursuant to Insurance Law § 3420(d)(2), and that he obtained a judgment against Countryway's insured, for which Countryway is now responsible. Countryway opposes Bahnuk's motion and has filed its own cross-motion seeking summary judgment and dismissal of the complaint. For the reasons set forth below Bahnuk's motion is denied, and Countryway's cross-motion is also denied.^[1]

BACKGROUND FACTS

The injuries in this case date back nine and a half years. The matter was previously before the Court on a motion to dismiss filed by Countrway and a cross-motion of Bahnuk for summary judgment. In a Decision and Order dated July 27, 2020, the Court denied both motions.

The Court will briefly summarize the pertinent facts. On March 6, 2012, Bahnuk was working as a paramedic and sustained injuries while responding to a call at 42 Tremont Avenue in Binghamton, NY. The premises were owned by Pauline Williams, who had a homeowner's policy with Countryway, with coverage effective from June 12, 2011 to June 12, 2012. Bahnuk sued Williams in Supreme Court in Broome County (Index No.: CA2013006424) for his injuries, and Countryway informed Williams that this was not a covered incident because Williams was not living at the premises, and secondly, because she was using the premises as rental property. Due to those facts, Countryway informed Williams that it did not believe the incident was a covered loss, and further, that Countryway would not be providing her with a defense of the action. Williams was thus required to defend the action herself without any insurance carrier. Williams ultimately signed a Confession of Judgment to Bahnuk for $100, 000 and a Judgment was entered in the County Clerk's Office in January 2019.

Bahnuk filed this case alleging that he has a direct cause of action under Insurance Law § 3420 (a)(2), which permits an injured party to bring a direct action against an insurer after that injured party has obtained a judgment against the insured. Bahnuk points to the judgment against Countryway's insured (Williams), which remains unsatisfied for at least 30 days. This gives him the right to pursue the direct action against the insurance carrier. He further claims that Countryway is precluded from raising any defenses because it did not provide him with a valid disclaimer.

Countryway claims it cannot be held responsible because the Judgment in the underlying action between Bahnuk and Williams was obtained by collusion in order to make Countryway ultimately pay the judgment. Countryway also continues to argue that it properly disclaimed coverage because Williams not living at the premises and was renting out the premises.

In the Court's earlier Decision and Order, which was prior to completion of discovery, the Court concluded that Countryway had not established collusion in the underlying judgment based upon documentary evidence (which was all the Court could consider on a motion to dismiss), and had not clearly shown that there should be no coverage for this incident. The Court also denied Bahnuk's motion for summary judgment motion and noted that discovery should be completed regarding whether any notice of the disclaimer was given to Bahnuk.

The primary issues between the parties at this point are: whether the resulting judgment in the underlying case between Bahnuk and William was the result of collusion so that the judgment should not bind Countryway under Insurance Law § 3420(a)(2); whether Countryway provided proper notice to disclaim to the injured party; whether the Tremont Ave location was Williams' residence such that Countryway is responsible for coverage for this accident; and whether rental of the premises excludes coverage.

BAHNUK'S CURRENT MOTION FOR SUMMARY JUDGMENT

Bahnuk's argument for summary judgment consists of two parts. One is based on the direct action against the insurance company supported by the underlying judgment against Williams, where liability and damages has already been determined. The other is based on Countryway not being able to claim any exclusions apply because it failed to give sufficient notice of the disclaimer to Bahnuk.

When seeking summary judgment, "the movant must establish its prima facie entitlement to judgment as a matter of law by presenting competent evidence that demonstrates the absence of any material issue of fact." Lacasse v. Sorbello, 121 A.D.3d 1241, 1241 (3^rd Dept 2014) citing Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986) and Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 (1985) (other citation omitted); see Amedure v. Standard Furniture Co., 125 A.D.2d 170 (3^rd Dept. 1987); Bulger v. Tri-Town Agency, Inc., 148 A.D.2d 44 (3^rd Dept. 1989), app dismissed 75 N.Y.2d 808 (1990). Such evidence must be tendered in admissible form. Zuckerman v. City of New York, 49 N.Y.2d 557 (1980); Friends of Animals, Inc. v. Associated Fur Mfrs., 46 N.Y.2d 1065, 1067-1068 (1979). Once this obligation is met, the burden shifts to the respondent to establish that a material issue of fact exists. Dugan v. Sprung, 280 A.D.2d 736 (3^rdDept. 2001); Sheppard-Mobley v. King, 10 A.D.3d 70, 74 (2^nd Dept. 2004) aff'd as mod. 4 N.Y.3d 627 (2005); Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324; Winegrad v. N.Y.Univ. Med. Ctr., 64 N.Y.2d 851, 853. "When faced with a motion for summary judgment, a court's task is issue finding rather than issue determination (see, Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 404 [1957]) and it must view the evidence in the light most favorable to the party opposing the motion, giving that party the benefit of every reasonable inference and ascertaining whether there exists any triable issue of fact." Boston v. Dunham, 274 A.D.2d 708, 709 (3^rd Dept. 2000); see, Boyce v. Vazquez, 249 A.D.2d 724, 726 (3^rd Dept. 1998). The motion "should be denied if any significant doubt exists as to whether a material factual issue is present or even if it is arguable that such an issue exists." Haner v. De Vito, 152 A.D.2d 896, 896 (3^rd Dept. 1989) (citation omitted); Lacasse v. Sorbello, 121 A.D.3d 1241; Asabor v. Archdiocese of NY., 102 A.D.3d 524 (1^st Dept. 2013). It "is not the function of a court deciding a summary judgment motion to make credibility determinations or findings of fact." Vega v. Restani Constr. Corp., 18 N.Y.3d 499, 505 (2012) (citation omitted).

Pursuant to Insurance Law § 3420(a)(2), "an injured claimant has a direct cause of action against an insurer only after the injured claimant first obtains a judgment against the insured." Sevenson Envtl Servs., Inc. v. Sirius Am. Ins. Co., 74 A.D.3d 1751, 1754 (4^th Dept. 2010) citing Lang v. Hanover Ins. Co., 3 N.Y.3d 350 (2004); Catskill v. Kemper Group-Lumbermen's Mut. Casualty Co., 111 A.D.2d 1011, 1012 (3^rd Dept. 1985); John v. Centennial Ins. Co., 91 A.D.2d 1104(3^rd Dept. 1983). Specifically, that section provides "that in case judgment against the insured ... in an action brought to recover damages for injury sustained ... during the life of the policy or contract shall remain unsatisfied at the expiration of thirty days from the serving of the notice of entry or judgment upon the attorney for the insured ... then an action may ... be maintained against the insurer under the terms of the policy or contract for the amount of such judgment not exceeding the amount of the applicable limit of coverage under such policy or contract."

Bahnuk has made a. prima facie showing of entitlement to summary judgment under Insurance Law § 3420(a)(2), by submitting evidence of the underlying action and judgment against Williams. The action was commenced in Broome County, and Williams was represented by an attorney. The Court conducted pre-trial conferences with the parties, and it appears that several conferences were re-scheduled due to the non-appearance of Williams' attorney. Eventually, the parties agreed to Williams signing a Confession of Judgment, which Bahnuk claims gave fair consideration of the risks to both sides in continuing the litigation. He argues that the resolution was the result of valid, good-faith negotiations. Based on this evidence, the Court concludes Bahnuk has made a prima facie showing by establishing the existence of the underlying judgment against Williams, the expiration of the 30 days since notice of entry of that judgment, and the existence of a valid contract of insurance between Williams and Countryway.

Similarly Bahnuk has made a. prima facie showing that Countryway is precluded from relying on any exclusions from coverage. There is no dispute that the incident occurred within the effective coverage dates of the insurance policy and occurred at the premises listed on the contract. It is also apparent that Countryway's disclaimer was not based on a "lack of inclusion" but was based on an "exclusion" from coverage. Accordingly, a timely disclaimer was required pursuant to Insurance Law § 3420(d). Markevics v. Liberty Mut. Ins. Co., 97 N.Y.2d 646 (2001). ...