Myers v. National Union Fire Insurance Company of Pittsburgh, Pa., 2007 NY Slip Op 33324(U) (N.Y. Sup. Ct. 10/5/2007)
| Decision Date | 05 October 2007 |
| Docket Number | 0603767/2006. |
| Citation | 2007 NY Slip Op 33324 |
| Parties | DWIGIIT MYERS, p/k/a HEAVY D, Plaintiff, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGII, PA., Defendant. |
| Court | New York Supreme Court |
Decision/Order
Motion sequence numbers 01 and 02 arc consolidated for decision disposition and resolved as follows.
The underlying cases arose as a result of a stampede at a celebrity basketball game at City College of New York on December 28, 1991. Plaintiff, Dwight Myers ("Myers"), was involved in planning the event. In addition, Myers was going to participate in this basketball game along with Sean Combs and other celebrities. Prior to the start of the game, patrons crowded the stairwell in an attempt to enter the gymnasium. A stampede erupted as the crowd rushed into the gymnasium, injuring and killing several people.
Myers had a $1,000,000 general liability entertainment insurance policy with Defendant, National Union Insurance Company of Pittsburgh, PA. ("National Union"), to cover costs arising from his job as an "Entertainer." When Myers was sued, along with others, in the personal injury cases arising from the stampede, National Union would not defend or indemnify him for any of the costs.
Through his counsel, Myers participated in the litigation of the personal injury and. wrongful death actions, and took part in the settlement negotiations. Ultimately, he entered into settlement agreements along with the other defendants in these cases. Allegedly, Myers' share of the settlements totaled $791,899, divided as follows: (1) $30,000 to Anthony Slaughter, paid December 1999; (2) $27,004.00 and $3621.19, to Al Naji and Katie Heard, respectively, paid November 1998; (3) $20,000 to Benjamin Andrews, paid May 2000; (4) $5,000 to Jeanice Roberts, paid May 1999; (5) $5,000 to Tiombe Curtis, paid May 1999; (6) $133,044.54 to the Christina Brown, paid May 1999; (7) $50,000 to the Estate of Charise Noel, paid May 1999; (8) $70,000 to Dorothy McCain, paid May 1999; (9) $70,000 to Barbara Swain, paid November 1998; (10) $70,000 to Yvonne Dargan, paid November 1998; (11) $164,479.38, still unpaid when the parties made the current motions, but owed to Sheila Williams; (12) $43,750.00 paid May 1999 to Jennifer Rainey; and (13) $100,000 to Nicole Levy, paid May 2000.
After it denied coverage to Myers in 1996, National Union brought an action seeking declaratory judgment that it did not have to indemnify and defend Myers. Nat'l. Union Fire Ins. Co. v. Ferrell & Myers, Inc., Index No. 117606/1996 (Sup, Ct. N.Y. County) ("Nat'l Union"). The Nat'l Union trial took place in 2004 before this Court, which issued a declaratory judgment that. National Union was obligated to defend and indemnify Myers in all the personal injury and wrongful death cases. Nat'l Union Fire Ins. Co. v. Ferrell & Myers, Inc., 4 Misc.3d 1013A, 791 N.Y.S.2d 872 (Sup, Ct, N.Y. County 2004)("Nat'l Union"). National Union appealed to the First Department, which affirmed this Court's decision. Nat'l Union Fire Ins. Co. v. Ferrell & Myers, Inc., 26 A.D.3d 191, 809 N.Y.S.2d 29 (1st Dept. 2006). On July 5, 2006, the Court of Appeals denied National Union's application to appeal. Nat'l Union Fire Ins. Co. v. Ferrell & Myers, Inc., 7 N.Y.3d 705, 819 N.Y.S.2d 873 (2006).
In 2006, Myers submitted his current order to show cause apparently1 using the caption and index number for the original case, attempting to obtain reimbursement of settlement and counsel fees and to obtain punitive damages. His counsel apparently — and incorrectly — thought that because I was an Acting Supreme Court Justice during the pendency of Nat'l Union and am now an elected Supreme Court Justice, the order to show cause was in a different court than the original declaratory judgment action had been. Counsel therefore tried to file the order to show cause separately, neither under the earlier caption, Nat'l Union Fire Ins. Co. v. Ferrell & Myers, Inc., Index No. 117606/1996 (Sup. Ct. N.Y. County), nor under another active case or proceeding. The Motion Support office rejected the order to show cause because it was not filed in connection with any existing case or a proceeding.
As a result of the above, Myers filed the new complaint currently before the Court and brought his order to show cause under the index number for this new action. In the current case, Myers seeks a finding that based on the decision in Nat'l Union he is entitled to indemnification and reimbursement of costs associated with the earlier actions and with this new case. He also seeks punitive damages. In his first cause of action, Myers requests $791,899, the reimbursement for settlements of the personal injury cases, plus interest of 9% per annum from the various dates at which he paid the settlements. In addition, Myers seeks reimbursement of $324,919 for legal fees he paid litigating the personal injury cases and the two actions with National Union itself, with 9% interest per annum from August 9, 2004, the date of this Court's decision in the declaratory judgment action.
Myers' second cause of action asks for the same amount of damages based on the theory of fraud and fraudulent inducement. Myers states that National Union made false statements with the intent of deceiving and defrauding Myers, and that these misrepresentations induced him to purchase the policy. Further, according to Myers, National Union issued the policy but never intended to cover Myers professionally as an entertainer.
The order to show cause seeks a ruling that the damages are as set forth above essentially, then, it seeks summary judgment for the relief set forth in the complaint. National Union opposes the order to show cause and also moves, separately rather than as a cross-motion, to dismiss the complaint. For the reasons below, both the order to show cause and motion are denied in part and granted in part.
The statute of limitations for bringing an action against an insurance company for denying coverage on a policy is six years. National Union makes the surprising argument that this case is time-barred because the present action was not brought within six years of the date of denial of coverage. Myers raises a number of arguments, attacks National Union's tactics, appeals to principles of equity and notice, and ultimately counters that he commenced this action within the statute of limitations period — stating that the statute should run from the date of this Court's declaratory judgment.
National Union's argument is faulty and Myers' response to it is convoluted. Therefore, without addressing the parties' arguments on this issue in detail, the Court finds that the action is timely to the extent that this case is based on the declaratory judgment action. Quite simply, as Myers suggests — albeit unclearly — in his opposition to National Union's motion at page 18, the case at hand seeks to enforce the declaratory judgment, not the insurance policy, and the statute of limitations should be computed accordingly. However, the remainder of the action — which asserts fraudulent inducement to enter into the insurance contract and seeks punitive damages based on National Union's failure to indemnify Myers — is untimely and shall be severed and dismissed. Myers provides no legitimate justification for adding new allegations of fraud, relating to the denial of coverage, at this late juncture.
The court notes that, even if the fraud and punitive damages claims were timely, they would fail on their merits. "Punitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights. " Fulton v. Allstate Ins. Co., 14 A.D.3d 380, 381, 788 N.Y.S.2d 349, 350 (1st Dept. 2005). To state a claim for punitive damages, therefore, Myers would have to "not only demonstrate egregious tortious conduct by which he ... was aggrieved, but also that such conduct was part of a pattern of similar conduct directed at the public generally." Id. Philips v, Republic Ins. Co., 108 .A.D.2d 845, 485 N.Y.S.2d 566 (2nd Dept.), aff'd, 65 N.Y.2d 1000, 494 N.Y.S.2d 301 (1985), upon which Myers partially relics, underscores the high threshold which exists in punitive damages claims arising under breach of insurance contracts. See also Flores-King v. Encompass Ins. Co., 29 A.D.3d 627, 818 N.Y.S.2d 221 (2nd Dept. 2006)(reiterating the standard).
The case at hand, like the dispute in Flores-King, involves "a private breach of contract dispute between the insurers and their insureds." 29 A.D.3d at 627, 818 N.Y,S.2d at 222 (citations and internal quotation marks omitted). The denial of coverage by National does not rise to the level of egregious tortious conduct. Myers contends that this case serves a greater public purpose "because it would set the standard for future insurers to be conscious of their grounds in disclaiming coverage and require a check and balance and appropriate sanction to those insurers who reap the financial benefits from their insurers {sic} and later create theory upon baseless theory in attempt to forgo their obligations to cover the insured under the insurance agreement." Order to Show Cause at ¶ 31. The same can be said about every case in which there is a bad faith or unsubstantiated denial of coverage, but the law does not provide for the award of punitive damages in all such situations.
In the fraud and fraudulent inducement claims contained in the second cause of action, Myers alleges that National Union made false statements that induced him into buying the policy and that National Union never intended to cover Myers under the policy. However, National Union says that Myers has given no reasoning or support to show that these allegations are in any way true.
The essential elements of a cause of action for fraud are "representation of a material existing fact, falsity, scienler, deception and injury" (citing ...
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