Petrosky v. Brasner

• Decision Date: 19 August 1999
• Citation: 695 N.Y.S.2d 281,181 Misc.2d 897
• Parties: Barbara PETROSKY, Individually and as Executrix of Frank Petrosky, Deceased, Plaintiff, v. Steven BRASNER et al., Defendants.
• Court: New York Supreme Court

Page 281

695 N.Y.S.2d 281

Barbara PETROSKY, Individually and as Executrix of Frank Petrosky, Deceased, Plaintiff, v. Steven BRASNER et al., Defendants.

Supreme Court, New York County, New York.

Aug. 19, 1999.

Turner & Owen, New York City (Hillary Kahan of counsel), for Steven Brasner, defendant.

Lawrence Goldberg, New York City, for Fabricant & Fabricant, Inc., defendant.

Slavin Law Firm, P.C., Jericho (L. Susan Slavin of counsel), for United States Life Insurance Company, defendant.

Birbrower, Montalbano, Condon & Frank, P.C., New City (Steven H. Beldock of counsel), for plaintiff.

JANE S. SOLOMON, J.

Having been rebuffed in her earlier negligence and contract claims against the defendant United States Life Insurance Company ("US Life"), by order of another justice of this court dismissing her prior complaint against US Life, plaintiff commenced the present action to obtain relief under a tort theory. In this second action, she casts a wider net to bring in additional parties and offers an argument novel to New York law--that a life insurance company, and by extension the independent agents it hires to collect information regarding the applicant's physical condition, and the broker the applicant engages, each undertakes the duty to disclose to rejected applicants any unfavorable medical data collected by the company in its underwriting function. Failure to disclose, according to her argument, results in tort liability if such disclosure might have warned the rejected applicant of impending harm. Because no such duty exists, the motions for dismissal by all defendants are granted.

This action, couched as one for negligence and wrongful death, is against US Life, Steven Brasner ("Brasner"), Fabricant & Fabricant, Inc. ("Fabricant"), Examination Management Services, Inc. ("EMSI") and Brett Jensen, who was sued as "John" ("Jensen"). Plaintiff is Barbara Petrosky, as widow and executrix of decedent Frank Petrosky ("Petrosky"). She opposes the defendants' motions, and moves to consolidate this action with the earlier one in which Brasner and Fabricant remain as defendants. Because the defendants' motions are granted, plaintiff's motion is moot.

BACKGROUND

By an application dated February 3, 1997 Petrosky sought life insurance with US Life through Brasner, an agent then affiliated with Fabricant. On the forms he signed that day, Petrosky claimed good health, denied smoking or other tobacco use, and sought a twenty year term policy with $500,000 coverage, naming his wife as beneficiary. The application form provided that no coverage would be effective unless "a policy is issued ... and the first premium is paid in full." Petrosky did not exercise an option for immediate coverage which was described on the application and which required that a payment be made with the application.

In connection with Petrosky's application, EMSI was designated to conduct medical tests of Petrosky for US Life. The tests were done on February 11, 1997 by Jensen, EMSI's employee. The tests included blood and urine samples and an electrocardiogram (ECG). Jensen is not a physician. Petrosky authorized the release of the information gathered in the examination to US Life, which received the results on or about February 26, 1997. US Life rejected Petrosky's application. It contends that it did so because the blood chemistry report indicated that he used tobacco, which he had denied in the application, and that it advised Brasner that the results were unfavorable. On April 2 On Friday morning, April 11, 1997, Petrosky presented at the Emergency Room of a hospital near his home complaining of pain from a fall the Sunday before. While there he suffered a fatal heart attack.

                1997 Brasner received from US Life a proposed policy for a shorter term and one-half the coverage which was based on "tobacco rates."   Brasner claims to have tried to reach Petrosky thereafter, without success.  Plaintiff alleges that Petrosky attempted to reach Brasner on several occasions, but that Brasner was unavailable.  Perhaps more importantly, she contends that the defendants knew that a serious heart condition was implicated by the findings of the tests reported to US Life
                

THE TWO LAWSUITS

Plaintiff's first lawsuit ¹ was initiated against Brasner, Fabricant and US Life on theories of breach of contract on the alleged policy and of negligence in failing timely ("within a reasonable period of time" is the phrase emphasized by her attorney) to issue the policy sought or, in the alternative, to advise Petrosky that the policy applied for was unavailable and arrange for the alternatives which US Life was prepared to offer to him. By a decision dated September 23, 1998, another justice of this court granted US Life's motion for summary judgment dismissing this first complaint against it, and denied a request for similar relief by Brasner and Fabricant. That action thereafter was transferred to me.

In this second action, plaintiff's claim is described as "based upon the failure of all the named defendants" to tell Petrosky "that he was suffering from a serious heart condition," which failure "denied [him] the opportunity to seek an evaluation and ultimately treatment." By her terms, this action assumes that each defendant had the knowledge the claim imputes to it.

THESE MOTIONS

Pursuant to an order dated November 23, 1998, motions to dismiss the second complaint were converted into motions for summary judgment, and further submissions were made. Accordingly, the following motions are the subject of this decision: 1. Motion by US Life to dismiss; 2. Cross-Motion by EMSI and Jensen to dismiss; 3. Cross-Motion by Brasner and Fabricant to dismiss; and 4. Cross-Motion by plaintiff to consolidate both actions (describing this action as one for "negligence and breach of contract").

Pursuant to CPLR § 3211(a)(4) US Life, Brasner and Fabricant urge dismissal of the second complaint because a prior action against the parties was pending when the second complaint was filed. This aspect of their motions is not without merit, but the issue of duplicative actions, and the cross-motion to consolidate, are moot following the present decision.

1. US Life

US Life further asserts that this action is barred against it under the doctrine of res judicata. The claims against US Life on the first action, including breach of contract and negligence, were dismissed by Justice Shainswit in her September 23, 1998 decision. In that matter, plaintiff alleged that US Life was negligent in the manner it processed Petrosky's application for insurance, and here the alleged negligence is in failing to inform the decedent of a harmful medical condition. "Afterthoughts or after discoveries however understandable and morally forgivable are generally not enough to create a right to litigate anew." Matter of Reilly v. Reid, 45 N.Y.2d 24, 28, 407 N.Y.S.2d 645, 379 N.E.2d 172 (1978). While res judicata arguably provides a strong second basis for dismissing the complaint against US Life, the claims in this action, which apply, in any event, to all of the defendants, are sufficiently distinct as to merit a separate discussion.

To prove negligence, a party must demonstrate the existence of a legal duty owed by the defendant to another, breach of that duty, and injury as a result of that breach. Akins v. Glens Falls City School District, 53 N.Y.2d 325, 332, 441 N.Y.S.2d 644, 424 N.E.2d 531 (1981), Pulka v. Edelman, 40 N.Y.2d 781, 390 N.Y.S.2d 393, 358 N.E.2d 1019 (1976), and see Palsgraf v. Long Isl. R.R. Co., 248 N.Y. 339, 342, 162 N.E. 99. In the absence of duty, there is no breach and without a breach there is no liability. Kimbar v. Estis, 1 N.Y.2d 399, 405, 153 N.Y.S.2d 197, 135 N.E.2d 708 (1956).

"The imposition of duty presents a question of law for the courts, ... resting on policy considerations of whether plaintiff's interests are entitled to legal protection against defendant's conduct." Eiseman v. State, 70 N.Y.2d 175, 189-190, 518 N.Y.S.2d 608, 511 N.E.2d 1128 (1987) (citation omitted). "Our law does not generally impose a duty to make disclosure, requiring some affirmative misrepresentation before imposing liability." McKinney v. Bellevue Hosp., 183 A.D.2d 563, 584 N.Y.S.2d 538 (1st Dept.1992). A failure to disclose the existence of a known danger may result in liability for negligence where the plaintiff is misled, resulting in an injury. Eiseman, 70 N.Y.2d at 187, 518 N.Y.S.2d 608, 511 N.E.2d 1128, and see Prosser & Keeton, Torts, section 33, p. 207 (5th Ed.1984). Such nondisclosure may be the equivalent of a misrepresentation where it is to be expected that another will rely upon the appearance of safety. Prosser & Keeton, at 207. Liability for nondisclosure arises only where there is a duty to give the correct information. Eiseman, 70 N.Y.2d at 188, 518 N.Y.S.2d 608, 511 N.E.2d 1128. "There must be knowledge or its equivalent that the information is desired for a serious purpose; that he to whom it is given intends to rely and act upon it; that if false or erroneous he will because of it be injured in person or property. Finally, the relationship of the parties ... must be such that ... the one has the right to rely upon the other for information, and the other giving the information owes a duty to give it with care." Id., citing International Prods. Co. v. Erie R.R. Co., 244 N.Y. 331, 338, 155 N.E. 662 (1927), cert. denied, 275 U.S. 527, 48 S.Ct. 20, 72 L.Ed. 408 (1927); and see Caracci v. State, 203 A.D.2d 842, 611 N.Y.S.2d 344 (3rd Dept.1994).

Whether there exists a legal duty on the part of a life insurer to disclose adverse medical information to an applicant to whom it rejects coverage appears to be a matter of first impression in New York. Two courts, applying the law of other states in cases involving similar facts (each arising from an insurer's failure to disclose an applicant's positive test results for human immunodeficiency virus [HIV] ), found that the...