Landmark Ins. Co. v. Beau Rivage Restaurant, Inc.
Decision Date | 22 December 1986 |
Citation | 121 A.D.2d 98,509 N.Y.S.2d 819 |
Parties | LANDMARK INSURANCE COMPANY, Appellant, v. BEAU RIVAGE RESTAURANT, INC., Respondent. |
Court | New York Supreme Court — Appellate Division |
Bouck, Holloway, Kiernan and Casey, Albany (Thomas J. Johnson, of counsel), for appellant.
J. Russell Clune, P.C., Harrison (Laura Freeman, of counsel), for respondent.
Before MOLLEN, P.J., and BRACKEN, BROWN and RUBIN, JJ.
The burden of showing that specific material is conditionally immune from discovery under CPLR 3101(d) because it was prepared solely in anticipation of litigation, is upon the party asserting the immunity (see, Koump v. Smith, 25 N.Y.2d 287, 294, 303 N.Y.S.2d 858, 250 N.E.2d 857; Westhampton Adult Home v. National Union Fire Ins. Co. of Pittsburgh Pa., 105 A.D.2d 627, 628, 481 N.Y.S.2d 358; Mold Maintenance Serv. v. General Acc. Fire & Life Assur. Corp., 56 A.D.2d 134, 135, 392 N.Y.S.2d 104). On this appeal, we have been requested to re-evaluate the test applied by this court in ascertaining whether or not an insurance carrier has met its burden of proving that the reports of an independent adjuster and arson expert, retained by it to investigate the origin of a fire on the insured's premises, were materials prepared solely for litigation and, thus, conditionally immune from discovery under CPLR 3101(d).
When confronted in prior cases with the question of whether an investigation report of an expert employed by an insurance carrier prior to issuing a disclaimer of indemnity coverage for loss by fire was material prepared in anticipation of litigation, we held that an insurance carrier had met its burden of proof upon showing that the report sought to be discovered was prepared after the date the insurer had substantial bona fide reasons to investigate the legitimacy of the loss (Seaview Chef v. Transamerica Ins. Co., 61 A.D.2d 1043, 403 N.Y.S.2d 123; Rossi v. Hartford Fire Ins. Co., 72 A.D.2d 548, 420 N.Y.S.2d 725; Abraham v. Hanover Ins. Co., 66 A.D.2d 808, 411 N.Y.S.2d 355; Foremost Ins. Co. v. 3 Grace Ave., 58 A.D.2d 590, 395 N.Y.S.2d 248). In contrast, our colleagues in the First and Fourth Judicial Departments have applied a stricter test by placing the emphasis upon the date when the insurance carrier made a firm decision to reject the claim, albeit the decision to disclaim may not have been conveyed to the insured on said date. Thus, the First and Fourth Departments have held that before an expert's investigation report will be found to be conditionally immune from discovery, the insurance carrier must make a bona fide showing that the subject report was prepared after it had reasonable grounds to reject the claim (see, Millen Ind. v. American Mut. Liab. Ins. Co., 37 A.D.2d 817, 324 N.Y.S.2d 930 Cuker, Inc. v. New York Prop. Ins. Underwriting Assn., 98 A.D.2d 621, 469 N.Y.S.2d 364 Westhampton Adult Home v. National Union Fire Ins. Co. of Pittsburgh Pa., 105 A.D.2d 627, 481 N.Y.S.2d 358 supra; Mold Maintenance Serv. v. General Acc. Fire & Life Assur. Corp., 56 A.D.2d 134, 392 N.Y.S.2d 104 supra; New England Seafoods of Amherst v. Travelers Ind. Co., 84 A.D.2d 676, 446 N.Y.S.2d 628 Hawley v. Travelers Ind. Co., 90 A.D.2d 684, 455 N.Y.S.2d 884 ). Upon re-evaluation, we hereby adopt the standard applied by the First and Fourth Departments, which is more in keeping with the policy of liberal disclosure under CPLR 3101(a) (see, Allen v. Crowell-Collier Pub. Co., 21 N.Y.2d 403, 288 N.Y.S.2d 449, 235 N.E.2d 430), and more accurately distinguishes between material prepared in the ordinary course of an indemnity insurer's business and material prepared exclusively in anticipation of litigation. This department's aforenoted cases, standing for the proposition that an insurance carrier can satisfy its burden of proving the expert's investigation report was prepared exclusively in anticipation of litigation by showing that it had substantial bona fide reasons to investigate the legitimacy of the loss at the time it employed the expert to conduct such an investigation, are hereby overruled.
In the instant case, a fire completely destroyed the defendant's restaurant on January 1, 1983. The premises were insured by the plaintiff. Shortly thereafter, the police and fire officials voiced the opinion that the fire was suspicious in origin. The plaintiff immediately retained an independent adjuster and an arson expert to conduct an investigation. On January 7, 1983, the adjuster and an arson expert inspected the premises. Based upon the arson expert's opinion that the fire was suspicious in origin, and his own observations, the adjuster received the plaintiff's authorization to retain attorneys. On March 17, 1983, the defendant submitted proof of loss in writing. On March 31, 1983, the plaintiff's attorneys conducted an examination under oath of the defendant's president, pursuant to the terms of the policy, and inspected financial records supplied by the defendant. Six months after the defendant submitted proof of loss in writing, the plaintiff issued a disclaimer of coverage.
Thereafter, the plaintiff commenced the instant action to declare the insurance policy void by reason, inter alia, that the hazard was increased by means within the control or knowledge of the insured. Issue was joined, and the defendant served a notice to discover and inspect the contents of plaintiff's claim file. Special Term denied the plaintiff's motion for a protective order on the ground the plaintiff failed to sustain its burden of proving that the report of its adjuster and arson expert were created exclusively in preparation for litigation. We agree.
(see, Millen Ind. v. American Mut. Liab. Ins. Co., 37 A.D.2d 817, 324 N.Y.S.2d 930, supra; Cuker, Inc. v. New York Prop. Ins. Underwriting Assn., 98 A.D.2d 621, 469 N.Y.S.2d 364, supra ). Consequently, in distinguishing between an expert's report prepared in the regular course of business to aid an insurance carrier's decision in evaluation of a claim and an expert's report prepared exclusively for anticipated litigation, the date a firm decision to disclaim coverage is made is the relevant date, rather than the date a...
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