People by Abrams v. American Motor Club, Inc.

• Decision Date: 29 October 1987
• Parties: The PEOPLE of the State of New York, by Robert ABRAMS, etc., et al., Petitioners-Respondents, v. AMERICAN MOTOR CLUB, INC., etc., et al., Respondents-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 383

520 N.Y.S.2d 383

133 A.D.2d 593

The PEOPLE of the State of New York, by Robert ABRAMS, etc., et al., Petitioners-Respondents, v. AMERICAN MOTOR CLUB, INC., etc., et al., Respondents-Appellants.

Supreme Court, Appellate Division,

First Department.

Oct. 29, 1987.

M.L. Goldberg, M. Hilgeman, New York City, for petitioners-respondents.

H.T. Berger, A.J. Goodman, J.L. Rosner, M.F. Murray, New York City, for respondents-appellants.

Before KUPFERMAN, J.P., and SULLIVAN, ROSENBERGER and ELLERIN, JJ.

MEMORANDUM DECISION.

Order and judgment (one paper), Supreme Court, New York County (Milton H. Richardson, J.), entered April 8, 1987, which, upon reargument, inter alia, granted petitioners' motion to amend the petition to add Nicholas Neu as a respondent, determined that respondents American Motor Club, Inc., Neu and John Senise had committed multiple violations of Insurance Law § 1102 for which they were jointly and severally liable to petitioners in the sum of $5,001,000, determined that respondents Neu and Senise had committed multiple violations of Insurance Law § 2117 for which they were jointly and severally liable to petitioners in the sum of $10,500, and directed said respondents to make restitution and pay damages to American Motor Club, Inc.'s customers, unanimously modified, on the law, to strike the provisions finding that respondent Neu committed violations of the Insurance Law and adjudging him personally liable in any respect, to strike the provisions finding that respondent Senise committed violations of Insurance Law § 1102 and adjudging him personally liable for the sum of $5,001,000 and, except as thus modified, affirmed, without costs or disbursements.

On this record it is clear, as the court of first instance found, that the prepaid collision service contract sold by American Motor Club is an insurance contract as defined by Insurance Law § 1101(a)(1). The Club, in the event of body damage or mechanical or electrical damage caused by collision, fire, theft, windstorm, hail, flood, malicious mischief, or vandalism, was obligated to repair the damaged car or reimburse the consumer for the loss, regardless of cost. The consumer is obligated to pay only the annual agreement fee (the premium) plus a service charge (the deductible) for the repair. Both amounts are set at the time of application and neither bears any relationship to the cost of repair or the reimbursement. The "benefit of pecuniary value" need not be money. It includes any goods or service with monetary value. (See, Ollendorff Watch Co. v. Pink, 279 N.Y. 32, 17 N.E.2d 676.) That the Club purchased its own policy of reinsurance does not alter the fact that the contract is one of insurance. (Id. at 37, 17 N.E.2d 676.) Nor is there any support for the Club's claim of estoppel since the other plans to which comparison is made differ materially and legally. Thus, on the basis of its finding, the court appropriately granted the injunctive relief sought and permitted amendment of the petition to join Neu, who was intimately involved in the Club's operations, as a party respondent. The simultaneous imposition of sanctions against Neu personally, however, violated proper statutory procedure (see, CPLR...