Reifenstein v. Allstate Ins. Co.

• Decision Date: 28 February 1983
• Citation: Reifenstein v. Allstate Ins. Co., 92 A.D.2d 715, 461 N.Y.S.2d 104 (N.Y. App. Div. 1983)
• Parties: Martin J. REIFENSTEIN, Appellant-Respondent, v. ALLSTATE INSURANCE COMPANY, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 104

461 N.Y.S.2d 104

92 A.D.2d 715

Martin J. REIFENSTEIN, Appellant-Respondent, v.ALLSTATE INSURANCE COMPANY, Respondent-Appellant.

Supreme Court, Appellate Division Fourth Department.

Feb. 28, 1983.

Culley, Marks, Corbett, Tanenbaum, Reifsteck & Potter by Cheryl Ciragusa, Rochester, for appellant-respondent.

Winchell, Connors & Corcoran by James Maslyn, Rochester, for respondent-appellant.

Before DILLON, P.J., and CALLAHAN, DENMAN, MOULE and SCHNEPP, JJ.

MEMORANDUM:

The primary issue on this appeal is whether Special Term erred in dismissing plaintiff's first cause of action against the Allstate Insurance Company for bad faith refusal to settle a liability claim within policy limits (seeCPLR 3211, subd. [a], par. 7).Special Term ruled that Allstate's settlement conduct did not as a matter of law constitute bad faith.Plaintiff also contends that Special Term improperly dismissed his punitive damage claims against Allstate.

On September 23, 1978 the passenger of an automobile operated by plaintiff was killed when the car left the highway, struck a utility pole and overturned.Thereafter, in an action for wrongful death and conscious pain and suffering brought by the decedent's father as administrator of the estate, a judgment was entered against plaintiff for $48,611.60, an amount in excess of the $10,000 limit of plaintiff's automobile liability policy with Allstate.Plaintiff then commenced this action for compensatory and punitive damages against Allstate in which he alleges, inter alia, that on February 7, 1979 an Allstate agent refused a demand for a $10,000 settlement made by the decedent's father and offered instead $9,500, explaining to the father that Allstate does "not pay the full policy limits of $10,000" and that "if [he] got a lawyer, a lawyer would charge a fee and ... [he] would eventually end up with even less than the amount Allstate was offering"; that shortly thereafter the agent offered to settle for $10,000 on the condition that the decedent's parents "furnish [Allstate] an affidavit setting forth the assistance rendered by the decedent in or about [the] home and the payments the decedent furnished for the parents' support", and told decedent's mother"that such affidavit was required by State Law"; and, that on July 17, 1979 Allstate, for the first time, offered without condition to settle for $10,000 and the offer was rejected by decedent's parents.

In considering the legal sufficiency of these allegations, plaintiff must be given the benefit of every possible favorable inference (seeRovello v. Orofino Realty Co., 40 N.Y.2d 633, 634, 389 N.Y.S.2d 314, 357 N.E.2d 970) and the complaint should not be dismissed if "upon examination of the four corners of the pleading ... the factual allegations contained therein indicate the existence of a cause of action."(Melito v. Interboro-Mut. Ind. Ins. Co., 73 A.D.2d 819, 820, 423 N.Y.S.2d 742;see, also, Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17;Etterle v. Excelsior Ins. Co. of N.Y., 74 A.D.2d 436, 440, 428 N.Y.S.2d 95.)So viewed, we hold that Special Term erred in dismissing this cause of action.The allegations are sufficient to indicate the existence of a cause of action for bad faith refusal to settle.

Where it is alleged that an insured lost an actual opportunity to settle the negligence claim against him within the coverage limits of his policy by reason of the insurer's purported "bad faith,"he states a cause of action against the insurer to recover the excess judgment (seeUnited States Fid. & Guar. Co. v. Copfer, 48 N.Y.2d 871, 873, 424 N.Y.S.2d 356, 400 N.E.2d 298;Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 436-437, 334 N.Y.S.2d 601, 285 N.E.2d 849, cert. den.410 U.S. 931, 93 S.Ct. 1374, 35 L.Ed.2d 593).Bad faith "is generally proven by evidence largely circumstantial in nature"(Kulak v. Nationwide Mut. Ins. Co., 47 A.D.2d 418, 420, 366 N.Y.S.2d 927, revd on other grds 40 N.Y.2d 140, 386 N.Y.S.2d 87, 351 N.E.2d 735) and...