Hilgreen v. Pollard Excavating, Inc.

• Decision Date: 23 November 2022
• Docket Number: 534185
• Parties: Matthew HILGREEN, Plaintiff, v. POLLARD EXCAVATING, INC., et al., Defendants, and Wendy Pollard, as Administrator of the Estate of John J. Pollard III, et al., Defendants and Third-Party Plaintiffs—Respondents; Central Mutual Insurance Company, Third-Party Defendant—Appellant, et al., Third-Party Defendants.
• Court: New York Supreme Court — Appellate Division

210 A.D.3d 1344

179 N.Y.S.3d 405

Matthew HILGREEN, Plaintiff,

v.POLLARD EXCAVATING, INC., et al., Defendants,andWendy Pollard, as Administrator of the Estate of John J. Pollard III, et al., Defendants and Third-Party Plaintiffs—Respondents;

Central Mutual Insurance Company, Third-Party Defendant—Appellant, et al., Third-Party Defendants.

534185

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: October 19, 2022

Decided and Entered: November 23, 2022

Rivkin Radler LLP, Uniondale (Michael C. Cannata of counsel), for third-party defendant-appellant.

E. Stewart Jones Hacker Murphy, LLP, Troy (Thomas J. Higgs of counsel), for third-party plaintiffs-respondents.

Before: Egan Jr., J.P., Clark, Pritzker, Reynolds Fitzgerald and Ceresia, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.P. Appeal from an order of the Supreme Court (Christina L. Ryba, J.), entered September 15, 2021 in Albany County, which, among other things, denied a motion by third-party defendant Central Mutual Insurance Company to dismiss the third amended third-party complaint.

As set forth in our prior decision in this matter ( Shepherd v. Annucci , 193 A.D.3d 1134, 141 N.Y.S.3d 737 [3d Dept. 2021], appeal dismissed 37 NY3d 1002 [2021]), plaintiff was purportedly injured in June 2016 when he fell on a staircase outside of his apartment on Main Street in the Village of Altamont, Albany County (hereinafter the subject property). In 2018, he commenced an action against John J. Pollard III and Clinda Pollard (hereinafter collectively referred to as the Pollards), the owners of the subject property, and defendant Pollard Excavating, Inc., a corporate entity owned and operated by the Pollards. He commenced a second action against a similar corporate entity, defendant Pollard Disposal Service, Inc., and the two actions were then consolidated pursuant to the parties’ stipulation.

The Pollards unsuccessfully sought a defense and indemnification under multiple insurance policies, including, as is relevant here, one issued to Pollard Excavating that provided premises liability coverage for the subject property and that had been issued by third-party defendant Central Mutual Insurance Company. The Pollards thereafter commenced a third-party action against Central Mutual and others that sought, among other things, a declaration that they were entitled to coverage under the Central Mutual policy and a defense and indemnification in this case. The third-party complaint was subsequently amended to, in relevant part, advance claims for reformation of the Central Mutual policy due to mutual mistake and for declaratory relief. Supreme Court issued an order in 2019 that, among other things, denied Central Mutual's motion to dismiss the amended third-party complaint and granted the Pollards’ cross motion for leave to serve a second amended third-party complaint. Supreme Court denied Central Mutual's motion to dismiss that pleading and directed it to serve an answer; upon appeal, this Court modified and granted the motion without prejudice (193 A.D.3d at 1137–1138, 141 N.Y.S.3d 737).

Supreme Court thereafter issued an order in which it, among other things, granted the Pollards’ motion for leave to file a third amended third-party complaint that sought reformation of the Central Mutual policy based upon mutual mistake, reformation based upon unilateral mistake coupled with fraud, and declaratory relief. The third amended third-party complaint also asserted claims alleging that Central Mutual should be estopped from denying the Pollards indemnification and a defense, as well as that the Pollards were entitled to damages for Central Mutual's breach of the covenant of good faith and fair dealing. Supreme Court then issued an order that, as is relevant here, denied Central Mutual's motion to dismiss that pleading. Central Mutual appeals.¹

"On a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a claim, [this Court] must afford the complaint a liberal construction, accept the facts as alleged in the pleading as true, confer on the nonmoving party the benefit of every possible inference and determine whether the facts as alleged fit within any cognizable legal theory" ( Hilgreen v. Pollard Excavating, Inc., 193 A.D.3d 1134, 1136, 146 N.Y.S.3d 323 [2021] [internal quotation marks and citations omitted]; see Matter of Mental Hygiene Legal Serv., Third Jud. Dept. v. Delaney, 38 N.Y.3d 1076, 1091, 171 N.Y.S.3d 842, 191 N.E.3d 1113 [2022] ; Singe v. Bates Troy, Inc., 206 A.D.3d 1528, 1530, 172 N.Y.S.3d 147 [3d Dept. 2022] ). In short, "if we determine that [the Pollards] are entitled to relief on any reasonable view of the facts stated, our inquiry is complete and we must declare the complaint legally sufficient" ( Aristy–Farer v. State of New York, 29 N.Y.3d 501, 509, 58 N.Y.S.3d 877, 81 N.E.3d 360 [2017] [internal quotation marks, brackets and citation omitted]; see Doe v. Bloomberg L.P., 36 N.Y.3d 450, 454, 143 N.Y.S.3d 286, 167 N.E.3d 454 [2021] ). Applying that standard here – and noting that the third amended third-party complaint includes significant additional factual allegations aimed at remedying the deficiencies we identified in its predecessor – we are satisfied that the third amended third-party complaint states claims against Central Mutual, and therefore affirm.

We turn first to the reformation claims in that pleading, which will ultimately require proof "that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud and to demonstrate in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties" ( Imrie v. Ratto, 187 A.D.3d 1344, 1346, 134 N.Y.S.3d 101 [3d Dept. 2020] [internal quotation marks and citation omitted]; accord Hilgreen v. Pollard Excavating, Inc., 193 A.D.3d at 1137, 146 N.Y.S.3d 323 ). Mutual mistake means that "the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement" ( Chimart Assoc. v. Paul, 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231 [1986] ; see Imrie v. Ratto, 187 A.D.3d at 1347, 134 N.Y.S.3d 101 ; Cheperuk v. Liberty Mut. Fire Ins. Co., 263 A.D.2d 748, 749, 693 N.Y.S.2d 304 [3d Dept. 1999] ). Unilateral mistake coupled with fraud, in contrast, requires that "the parties have reached agreement and, unknown to one party but known to the other (who has misled the first), the subsequent writing does not properly express that agreement" ( Chimart Assoc. v. Paul, 66 N.Y.2d at 573, 498 N.Y.S.2d 344, 489 N.E.2d 231 ; see Rosen Auto Leasing, Inc. v. Jacobs, 9 A.D.3d 798, 800, 780 N.Y.S.2d 438 [3d Dept. 2004] ; Loyalty Life Ins. Co. v. Fredenberg, 214 A.D.2d 297, 299, 632 N.Y.S.2d 901 [3d Dept. 1995] ).

The Pollards had consistently maintained that the Central Mutual policy was intended to provide liability coverage for the subject property and that they had asked Central Mutual's agents to obtain that coverage for them as the owners of the subject property, as well as that both they and Central Mutual mistakenly believed that the Central Mutual policy provided that coverage. The written policy failed to conform with that claimed mistaken belief, as it designated Pollard Excavating as the named insured despite the fact that the Pollards owned the subject property. The third amended third-party complaint included additional factual allegations to illustrate how Central Mutual either shared the Pollards’ misunderstanding as to who was covered by the policy or fraudulently misrepresented the true state of affairs while knowing that they were not entitled to coverage. In particular, the Pollards alleged that the Central Mutual policy first took effect on December 31, 2013 and that, by May 15, 2014, Central Mutual knew or should have known that the written policy inaccurately identified the named insureds because its agent conducted a risk assessment of the subject property and notified it that the Pollards owned the subject property. The Pollards further detailed how Central Mutual subsequently behaved in a manner that reflected either a mutual misunderstanding as to who was covered by the policy or Central Mutual's knowing misrepresentation that the policy covered the Pollards when it...