Imrie v. Ratto

• Decision Date: 22 October 2020
• Docket Number: 528858
• Parties: Daniel F. IMRIE II, Appellant, v. Andrew R. RATTO et al., Defendants, and Erie Insurance Company, Respondent. (Action No. 1.) Daniel F. Imrie II, Individually and as Assignee of Andrew R. Ratto et al., Appellant, v. Jeffrey D. Howard et al., Respondents. (Action No. 2.)
• Court: New York Supreme Court — Appellate Division

187 A.D.3d 1344
134 N.Y.S.3d 101

Daniel F. IMRIE II, Appellant,
v.
Andrew R. RATTO et al., Defendants,
and
Erie Insurance Company, Respondent. (Action No. 1.)

Daniel F. Imrie II, Individually and as Assignee of Andrew R. Ratto et al., Appellant,
v.
Jeffrey D. Howard et al., Respondents. (Action No. 2.)

528858

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

Calendar Date: September 14, 2020
Decided and Entered: October 22, 2020

134 N.Y.S.3d 103

The Clements Firm, Glens Falls (Thomas G. Clements of counsel), for appellant.

Rupp Baase Pfalzgraf Cunningham LLC, Buffalo (Marco Cercone of counsel), for Erie Insurance Company, respondent.

Maynard, O'Connor, Smith & Catalinotto, LLP, Albany (Lia B. Mitchell of counsel), for Jeffrey D. Howard and another, respondents.

Before: Garry, P.J., Clark, Devine, Pritzker and Colangelo, JJ.

MEMORANDUM AND ORDER

Garry, P.J.

Appeals (1) from an amended judgment of the Supreme Court (Auffredou, J.), entered February 26, 2019 in Warren County, which, in action No. 1, among other things, denied plaintiff's motion for partial summary judgment, and (2) from an order of said court, entered May 15, 2019 in Warren County, which, among other things, (a) granted a motion by defendant Erie Insurance Company for summary judgment dismissing the second amended complaint in action No. 1 and the amended complaint in action No. 2 against it, and (b) in action No. 2, granted a motion by defendants Jeffrey Howard and Adirondack Regional Insurance Agency, Inc. for summary judgment dismissing the amended complaint against them.

In November 2009, plaintiff leased his auto repair business and garage to defendant Andrew R. Ratto, a principal in Ratto Restorations, Inc. (hereinafter the corporation). Defendant Jeffrey D. Howard, an insurance agent employed by defendant Adirondack Regional Insurance Agency, Inc., procured a property insurance policy (hereinafter the property policy) and a garage liability insurance policy (hereinafter the liability policy) for the business and

134 N.Y.S.3d 104

property from defendant Erie Insurance Company. Plaintiff was named as an additional insured on the liability policy and, after some initial changes, the corporation was named as the insured on both policies. Plaintiff then sold the business and property to Ratto in March 2010. Ratto financed the purchase by giving plaintiff two mortgages on the property. Both mortgages obliged Ratto to insure the property against "loss by fire" and to include "the standard New York [m]ortgage clause" naming plaintiff as the mortgagee.

After the closing, Ratto's wife, Catherine McDonough–Ratto (hereinafter the wife), the other principal in the corporation, advised Howard of the purchase and asked him to have plaintiff named as the mortgagee on the property policy. Howard agreed to do so, but sent the wrong form to Erie and, thus, inadvertently instructed Erie to add plaintiff as a mortgagee on the liability policy. Erie did not respond to this request or to Adirondack's follow-up request about a month later. Plaintiff was not named as a mortgagee in the property policy that Erie ultimately issued or in subsequent renewals.

In July 2013, after Ratto failed to make mortgage payments and plaintiff learned that a tax foreclosure action had been commenced against the property, plaintiff commenced action No. 1 against Ratto, seeking foreclosure of the mortgages. A week later, a fire destroyed the garage and the business.¹ Plaintiff then learned that he was not named as a mortgagee on the property policy and that the corporation, rather than Ratto, was the named insured.² Erie refused to pay the proceeds of the property policy to Ratto or the corporation because of alleged lack of cooperation, and denied plaintiff's claim as a mortgagee because he was not so identified in the property policy.

Pursuant to a second amended complaint in action No. 1, plaintiff asserted an additional claim of breach of contract against Ratto and a claim against Erie seeking a judgment declaring plaintiff's rights under the property policy and asserting that plaintiff had an equitable lien on the proceeds or, in the alternative, was entitled to reformation of the property policy to name plaintiff as the mortgagee. Erie moved for summary judgment dismissing the second amended complaint against it, and plaintiff opposed on the ground, among other things, that Erie had failed to comply with his discovery demands. Supreme Court granted Erie's motion. Upon plaintiff's appeal, this Court reversed, finding that Erie's motion was premature because of the incomplete discovery ( 145 A.D.3d 1358, 45 N.Y.S.3d 230 [2016] ).

Meanwhile, plaintiff obtained an assignment of the property policy from Ratto and the corporation and commenced action No. 2 asserting, in an amended complaint, claims against (1) Erie – both as an assignee and in his individual capacity as a third-party beneficiary of the property policy – for breach of contract, reformation and unjust enrichment, (2) Adirondack individually for breach of contract, and (3) Erie, Howard and Adirondack (hereinafter collectively referred to as defendants), as assignee and individually for negligence, promissory estoppel and a declaratory judgment.³ Following the first appeal and

134 N.Y.S.3d 105

the completion of discovery, plaintiff moved for (1) partial summary judgment on his claims against Ratto and for approximately $145,000 in counsel fees and disbursements, (2) partial summary judgment against Erie on his individual claim for reformation of the property policy and payment to him of the amount owed thereunder, and (3) partial summary judgment against Howard and Adirondack for payment to him of the amount owed under the property policy and for plaintiff's counsel fees and disbursements in litigating its claims against Erie. Erie cross-moved for summary judgment dismissing the second amended complaint in action No. 1 and the amended complaint in action No. 2. Adirondack and Howard cross-moved for reformation of the property policy and for summary judgment dismissing both complaints and Erie's cross claims.

Ratto did not oppose plaintiff's motion. In February 2019, Supreme Court partially granted the motion to the extent that it sought summary judgment on plaintiff's claims against Ratto and issued an amended judgment that, among other things, awarded plaintiff $25,000 in counsel fees. In a separate order issued in May 2019, the court denied the remaining claims in plaintiff's motion, granted Erie's motion in its entirety, granted Howard and Adirondack's motion to the extent that it sought dismissal of the complaints and Erie's cross claims and otherwise denied it, and dismissed the second amended complaint in action No. 1, the amended complaint in action No. 2, and the cross claims. Plaintiff appeals from the February 2019 amended judgment and from the May 2019 order.

Turning first to plaintiff's motion for partial summary judgment on his claim for reformation of the property policy, "[t]he province of reformation is to make a writing express the bargain which the parties desired to put in writing. There must have been a meeting of the minds of the contracting parties concerning the agreement, or agreements, which the court is asked to declare existent" ( Lewitt & Co., Inc. v. Jewelers' Safety Fund Socy., 249 N.Y. 217, 221, 164 N.E. 29 [1928] [internal quotation marks and citations omitted] ). As the party seeking reformation, it was plaintiff's burden to show, "by clear and convincing evidence, 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" ( Tompkins Fin. Corp. v. John M. Floyd & Assoc., Inc., 144 A.D.3d 1252, 1255–1256, 41 N.Y.S.3d 577 [2016] [internal quotation marks and citations omitted]; see Vollbrecht v. Jacobson, 40 A.D.3d 1243, 1245, 838 N.Y.S.2d 188 [2007] ).⁴ Reformation may be granted when clear and convincing evidence establishes that the parties reached an oral agreement that, without their knowledge, was not embodied in the subsequent written

134 N.Y.S.3d 106

contract (see Chimart Assoc. v. Paul, 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231 [1986] ; Loyalty Life Ins. Co. v. Fredenberg, 214 A.D.2d 297, 299, 632 N.Y.S.2d 901 [1995] ).

Plaintiff asserts that reformation of the property policy to name him as the mortgagee is appropriate because the undisputed evidence demonstrates that Ratto, the wife, Howard and Adirondack intended to have him so named and reached an oral agreement to that effect, but that, without their knowledge and because of mutual mistake, the property policy did not embody that agreement. In support of this claim, plaintiff submitted the uncontradicted testimony of Ratto and the wife that they were aware of the requirement to have plaintiff named as a mortgagee on the property policy as required by the mortgages and intended to comply with it, that the wife asked Howard to make the change, and that she and Ratto believed afterward that the change had been made and that plaintiff had become a mortgagee on the property policy....