M.V.B. Collision Inc. v. State Farm Ins. Co.

• Decision Date: 20 February 2018
• Docket Number: CV–008402–16NA
• Citation: 72 N.Y.S.3d 407,59 Misc.3d 406
• Parties: M.V.B. COLLISION INC. dba Mid Island Collision, as assignee of David Stulberger, as assignee of Jaqueline Drouillard, as assignee of Kwesi Evangelist, Plaintiff, v. STATE FARM INSURANCE COMPANY, Michael Thompson, Michael Thiele, John Seara and John Knapic, Defendants.
• Court: New York District Court

59 Misc.3d 406

72 N.Y.S.3d 407

M.V.B. COLLISION INC. dba Mid Island Collision, as assignee of David Stulberger, as assignee of Jaqueline Drouillard, as assignee of Kwesi Evangelist, Plaintiff,

v.STATE FARM INSURANCE COMPANY, Michael Thompson, Michael Thiele, John Seara and John Knapic, Defendants.

CV–008402–16NA

District Court, City of New York, New York, Nassau County, First District.

Decided on February 20, 2018

Steven F. Goldstein, LLP, attorneys for Plaintiffs, One Old Country Road, Suite 318, Carle Place, New York 11514, (516) 873–0011;

Hurwitz & Fine, P.C., attorneys for Defendants, 535 Broad Hollow Road, Suite A–7, Melville, NY 11747, (631) 465–0700.

Scott Fairgrieve, J.

The following named papers numbered 1 to 4 submitted on this Motion to Dismiss on January 26, 2018Defendants move for an order pursuant to CPLR § 3211, dismissing the complaint on the grounds that plaintiff has no legal capacity to sue.

Plaintiff commenced this action against defendant State Farm Insurance Company, and the insurance adjusters employed by State Farm, concerning claims resulting from collision damages sustained by State Farm insureds.

The Verified Complaint, dated August 1, 2016, provides the following allegations regarding the causes of action asserted.

Verified Complaint

State Farm issued an automobile policy to David Stulberger to insure a 2015 Nissan Rogue for collision damage. The said Nissan Rogue was involved in an accident on May 11, 2016. State Farm sent a representative who determined that the Nissan should be repaired. Plaintiff repaired the Nissan at a cost of $14,101.80. State Farm offered $9,960.36. It is alleged that the difference between $14,101.80 and $9,960.36, or $4,141.44, is a debt owed to plaintiff by David Stulberger. David Stulberger has the right to pursue State Farm for the difference but has instead assigned his right of enforcement to plaintiff.

Jaqueline Drouillard insured her 2016 Mercedes Benz C300 STD 4–door sedan with State Farm. The Mercedes was involved in a motor vehicle accident on April 2, 2016, which resulted in the vehicle being repaired by plaintiff at a cost of $13,523.04. State Farm offered $8,052.21 for the repairs. The difference between $13,523.04 and $8,052.21, or $5,470.83, constitutes a debt owed by Jaqueline Drouillard to plaintiff. Jacqueline Drouillard has the right to pursue State Farm for this debt but she has assigned her right to plaintiff to recover the difference.

State Farm issued a policy for Kwesi Evangelist's 2014 Mercedes Benz C300. This Mercedes Benz C300 was involved in an accident on May 16, 2016. Plaintiff repaired the Mercedes at a cost of $10,025.06. State Farm offered $7,982.54 leaving a difference of $2,042.52. Kwesi Evangelist assigned to plaintiff his right to recover this debt from State Farm.

The first cause of action is designated "(Breach of Contract as to David Stulberger)." It is alleged that State Farm breached its contractual obligation by failing to pay the debt owed by its insured, David Stulberger, in the sum of $4,141.44 to plaintiff. David Stulberger assigned his claim against State Farm to plaintiff.

The second cause of action is designated as "(Breach of Contract as to Jaqueline Drouillard)." It is alleged that State Farm breached its contractual obligation to pay the difference of $5,470.83 pertaining to the debt owed by its insured, Jaqueline Drouillard, to plaintiff. Jaqueline Drouillard assigned her claim against State Farm to plaintiff.

The third cause of action is described as "(Breach of Contract as to Kwesi Evangelist)." It is alleged that State Farm breached its contractual obligation by failing to pay the debt owed by its insured, Kwesi Evangelist, in the sum of $2,042.52. Kwesi Evangelist assigned this claim against State Farm to plaintiff.

The fourth cause of action asserts a negligence claim against defendant Michael Thompson concerning the adjustment of the damage sustained by the vehicle owned by David Stulberger. It is further alleged that defendant Michael Thompson violated New York State Insurance Law and Regulation 64 § 216.7, in failing to properly adjust the claim.

The fifth cause of action asserts a negligence claim against defendant Michael Thiele for failing to properly adjust the damage sustained by the vehicle owned by Jaqueline Drouillard. There is an allegation that defendant Michael Thiele failed to properly perform his duties in violation of New York State Insurance Law and Regulation 64 § 216.7.

The sixth cause of action alleges a negligence action against defendant John Seara regarding the adjustment of the vehicle owned by Jaqueline Drouillard. It is also alleged that defendant John Seara violated New York State Insurance Law and Regulation 64 § 216.7.

The seventh cause of action asserts negligence against defendant John Knapic concerning his adjustment of the vehicle owned by Jaqueline Drouillard and that he violated New York State Insurance Law and Regulation 64 § 216.7.

Defendant State Farm argues that plaintiff cannot enforce the contractual rights of the insured because plaintiff is not an assignee under the policies. It is claimed that since State Farm did not consent to the assignments by its insureds, no rights to sue can be asserted by plaintiff. Defendant State Farm also maintains that no claim can be asserted because the vehicles were returned to their pre-accident condition. It is also contended that there is no proof that plaintiff attempted to collect the sums owed by State Farm's insureds.

Defendant State Farm asserts that the following language in the State Farm policy prohibits the alleged assignments by State Farm insureds (p.30 of policy):

"8. Assignment

No assignment of benefits or other transfer of rights is binding upon us unless approved by us ."

Defendants insist that causes of action numbered 4–7 must be dismissed because:

(1) The adjusters were performing for a disclosed principal;

(2) no duty of care exists between plaintiff and the adjusters; and

(3) there is no private right of action for violating New York State Insurance Law and Regulation 64 § 216.7.

Opposition to Motion

In opposition to the motion to dismiss, plaintiff maintains that the assignments here are valid because:

"6. By the policy's own language, the insured may not assign any of his/her benefits or rights under the contract . The subject Assignments in the case at bar do not purport to assign any benefits or rights the assignors have under the contract. They assign to Plaintiff the right to pursue STATE FARM, by means of a lawsuit or otherwise, for its refusal to pay for ‘any and all claims arising out of the adjustment, repair, and payment of physical damage to ... 'The subject Assignments thereby assign to Plaintiff the assignors' rights to sue Defendant, STATE FARM INSURANCE COMPANY, for breach of their policies by it in refusing to pay the subject claims. Copies of three (3) subject Assignments are annexed hereto as Exhibit ‘A’.

7. The provision in the STATE FARM policies, which were breached by it, states specifically that STATE FARM will pay the cost to repair the covered vehicle, minus any applicable deductible (See ‘Exhibit E’ to Defendants' Motion, p.18 ‘Limits and Loss Settlement—Comprehensive Coverage and Collision Coverage’).

8. In light of the fact that Plaintiff, M.V.B. COLLISION, INC., is suing STATE FARM for breach of the subject insurance policies as assignee of the three (3) STATE FARM insureds, Defendants' reliance on the Sillman and R/S Assocs. cases is misplaced, as those pertain to situations where the Assignments were of rights and/or benefits under the policies .

9. In light of the aforementioned facts, the lack of contractual privity between Plaintiff and Defendant, STATE FARM, is irrelevant, as it is not required where there is a valid Assignment."

Decision

The motion for summary judgment to dismiss the first three (3) causes of action is denied. The assignments by the State Farm insureds to plaintiff are valid and are not prohibited by the subject clause in the State Farm policy:

In Ardon Const. Corp. v. Firemen's Ins. Co. of Newark, N.J. , 16 Misc. 2d 483, 185 N.Y.S.2d 723 (Sup. Ct., Kings County 1959)affirmed 11 A.D.2d 766, 205 N.Y.S.2d 973 (2nd Dept. 1960), defendant Firemen's Insurance Company issued a policy covering fire loss for its insured's building. The building was partially destroyed by fire. The insured assigned its claim to recover under the policy to the contractor plaintiff Ardon Construction Corp. . The defendant contended that the assignment was ineffective because of a provision in the policy prohibiting its assignment. The lower Court held that rights under a policy of insurance may be assigned after a fire loss despite the anti-assignment clause:

"Defendant contends further that the complaint is insufficient because of the provision in the policy prohibiting its assignment. While the policy itself is not before the court since it has been alleged to be a standard policy, the court may judicially notice its provisions ( Raegener v. Willard , 44 App. Div. 41, 60 N.Y.S. 478 ). Pursuant to section 168 of the Insurance Law the standard provision is that ‘Assignment of this policy shall not be valid except with the written consent of this Company.’ This provision, as every provision in a policy, must be strictly construed against the insurer. There is no interdiction by its terms against the assignment of an existing claim as distinguished from the policy itself. It has long been the doctrine of this State that rights under a policy of insurance may be assigned after loss, notwithstanding a clause in the policy forbidding assignments (Goit v. National Protection Ins. Co. , 25 Barb. 189; Brichta v. New York Lafayette Ins. Co. , 2 Hall 372; Courtney v. New York City Ins. Co. , 28 Barb. 116). In fact, it has been held that a provision in an insurance policy prohibiting a transfer of the insured's interest after loss would be illegal and void (Carrol v. Charter Oak Ins. Co. , 40 Barb. 292). Moreover,

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