Hartford Ins. Group v. Posen

Citation134 Misc.2d 334,511 N.Y.S.2d 1
PartiesHARTFORD INSURANCE GROUP, Plaintiff, v. Herman POSEN and Fay Posen, Defendants
Decision Date14 October 1986
CourtNew York City Court

Leonard Bernstein, Zipser, Zipser & Bernstein, P.C., New York City, for plaintiff.

Jack G. Russo, Frankel & Russo, New York City, for defendants.

PHYLLIS GANGEL-JACOB, Judge.

Defendants move to strike this action from the trial calendar because pretrial disclosure is incomplete. Plaintiff cross-moves for summary judgment and in reply to the cross motion, Defendants move for summary judgment dismissing the complaint. Defendants' motion for summary judgment is granted and Plaintiff's cross-motion is denied. Defendants' motion to strike is moot.

This is an action by an insurance company against its insureds to recover money paid on the policy. Defendant insureds suffered personal injury and property damage in an airplane crash on September 13, 1982. Plaintiff covered them for homeowners' insurance at the time, and on February 24, 1983, Plaintiff paid their claim for lost luggage in the amount of $4022.13.

Defendants also sued the airline and manufacturer of the aircraft, among others, in federal court, seeking $1,000,000 for each of them in compensatory damages, as well as exemplary damages. On December 22, 1983, Defendants executed a release of all their claims against all parties in return for $35,000 from Spantax, S.A., a defendant in the federal action. The release, printed on a standard form, stated that all Defendants' claims and those of their assigns were being released, "by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this RELEASE." The release also contained a typewritten paragraph stating: "Releasors further agree to indemnify and hold harmless Releasees from any claims made by the Releasors' homeowners insurance policy carrier with respect to claims arising from the SPANTAX incident on September 12, 1982." Plaintiff demands that Defendants return the money it paid on the policy, arguing that Defendants were paid twice for the lost luggage, once by Plaintiff, and once in consideration of the release.

As a general rule, "an insurer who pays claims against the insured for damages caused by the default or wrongdoing of a third party is entitled to be subrogated to the rights which the insured would have had against such third party." Ocean Accident and Guarantee Corp. v. Hooker Electrochemical Co., 240 N.Y. 37, 47, 147 N.E. 351 (1925). "This right of subrogation is based upon principles of equity and natural justice." Id. This rule also applies when a property insurer pays a claim for property damage covered by the policy, E.g., Hamilton Fire Ins. Co. v. Greger, 246 N.Y. 162, 164, 150 N.E. 60 (1927).

Nevertheless, the right of subrogation may be destroyed if the insureds execute a release of their claims against the alleged wrongdoer so that the insurance company's only remedy is to recover the amount paid from its insureds. Aetna Casualty & Surety Co. v. Schulman, 70 A.D.2d 792, 793, 417 N.Y.S.2d 77 (1st Dept.) mot. for leave to appeal denied, 48 N.Y.2d 608, 424 N.Y.S.2d 1025, 399 N.E.2d 1205 (1979); Metropolitan Casualty Insurance Co. v. Badler, 132 Misc. 132, 133, 229 N.Y.S.2d 81 (App.Term, 1st Dept.1928). But a release destroys subrogation rights only if the alleged wrongdoer did not know or have reason to know of the insurance coverage and the insurer's claim to subrogation rights. Ocean, 240 N.Y. at 46, 147 N.E. 351; Aetna, 70 A.D.2d at 793-94, 417 N.Y.S.2d 77.

An express reservation in the release of the insurance company's rights constitutes notice to, and indicates knowledge by, the alleged wrongdoer that the insurer intends to proceed against it; thus, the insurer retains its subrogation rights. Weinberg v. Transamerica Insurance Co., 62 N.Y.2d 379, 383, 477 N.Y.S.2d 99, 465 N.E.2d 819 (1984); Ziegler v. Raskin, 100 A.D.2d 814, 816, 474 N.Y.S.2d 745 (1st Dept.1984) appeals dismissed, 63 N.Y.2d 674, 479 N.Y.S.2d 527, 468 N.E.2d 709 (1984) and 65 N.Y.2d 925 (1985); Record v. Royal Globe Insurance Co., 83 A.D.2d 154, 158-59, 443 N.Y.S.2d 755 (2d Dept.1981).

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2 cases
  • U.S. Fidelity and Guar. Co. v. Mitchell
    • United States
    • New York Supreme Court — Appellate Division
    • 21 Diciembre 1990
    ...Co., 240 N.Y. 37, 50-51, 147 N.E. 351; Silinsky v. State-Wide Ins. Co., 30 A.D.2d 1, 3, 289 N.Y.S.2d 541; Hartford Ins. Group v. Posen, 134 Misc.2d 334, 336, 511 N.Y.S.2d 1). Accordingly, the application for a stay of arbitration should have been denied, and the parties should have been dir......
  • Nationwide Ins. Co. v. Mocchia
    • United States
    • New York Supreme Court — Appellate Division
    • 27 Octubre 1997
    ...104 A.D.2d 839, 480 N.Y.S.2d 241; Aetna Cas. & Sur. Co. v. Schulman, 70 A.D.2d 792, 793, 417 N.Y.S.2d 77; Hartford Ins. Group v. Posen, 134 Misc.2d 334, 336, 511 N.Y.S.2d 1; Aetna Cas. & Sur. Co. v. Norwalk Foods, 125 Misc.2d 986, 480 N.Y.S.2d ...

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