Shants Inc. v. Capital One N.A.

Decision Date31 January 2013
Docket NumberNo. 013526/11.,013526/11.
Citation2013 N.Y. Slip Op. 50123,38 Misc.3d 1217,967 N.Y.S.2d 870
PartiesSHANTS INC., Plaintiff, v. CAPITAL ONE N.A., MRW Group, Inc., Tower Insurance Company of New York, Defendants.
CourtNew York Supreme Court


Gabriel Mendelberg, Esq., Law Offices of Gabriel Mendelberg, New York, Attorney for Plaintiff.

Maryam Parvaneh, Esq., Lazer, Aptheker, Rosella & Yedid, P.C., Melville, Attorney for Defendant Capital One, N.A.

Debra M. Krebs, Esq., Robert W. Lewis, Esq., Keidel, Weldon & Cunningham, LLP, White Plains, Attorney for Defendant MRW Group, Inc.

Joseph S. Wiener, Esq., Law Office of Max W. Gershweir, New York, Attorney for Defendant Tower Insurance Company of New York.


The motion by defendant MRW Group, Inc. (MRW) (seq. no. 002) pursuant to CPLR 3212 and, in effect, CPLR 3001, for summary judgment declaring that a certain fire insurance policy issued by co-defendant Tower Insurance Company of New York (Tower) was in full force and effect on March 11, 2011, the date of a fire at the plaintiff Shants, Inc. (Shants)'s premises and that Tower therefore owes coverage under the policy, and dismissing all claims asserted against MRW, is decided as set forth in this order.

The motion by defendant Capital One, N.A. (Capital One) (seq. no. 003) pursuant to CPLR 3025(b) to amend its answer to include, inter alia, additional affirmative defenses and cross claims against Tower and MRW, is decided as set forth in this order.

The cross motion by Tower (seq. no. 004) pursuant to CPLR 3211(a)(1) and (7) and CPLR 3212 to dismiss the complaint and all cross claims asserted against it is decided as set forth in this order.

The instant litigation arose from a fire on March 11, 2011, causing extensive damage to commercial premises owned by Shants, located at 157–163 Hempstead Avenue in West Hempstead, New York. Prior to the fire Shants had purchased a renewal commercial insurance policy which provided coverage for such a loss. The policy had been procured for Shants by MRW, its broker/agent, who did so through a non-party “producer”, Jersey Link, Inc.1 On page 10 of the Declarations section the policy named GreenPoint Mortgage Funding (“GreenPoint”) as the insured's mortgagee, giving an address in Atlanta, Georgia. The policy had an effective date of August 17, 2010 and a one-year term, during which the fire occurred.

However, on August 24, 2010, Tower sent a Notice of Cancellation (“Notice”). The Notice recited that the reason was nonpayment of the premium, that it was being issued pursuant to New York Insurance Law § 3426(c)(1)(a), and that cancellation would be effective at 12:01 a.m. on September 13, 2010. It also stated that “If the premium due is received by the cancellation effective date, your policy will remain in effect with no lapse of coverage.”

The Notice was sent to both Shants and to GreenPoint. Page 5 of an endorsement entitled “New York Changes—Cancellation and Nonrenewal” provides for notice in the event the policy is to be cancelled. In relevant part, it states as follows:

f. Cancellation

u(1) If we cancel this policy, we will give written notice to the mortgage holder at least:

(a) 10 days before the effective date of cancellation if we cancel for your nonpayment of premium

On August 31, 2010, between the mailing of the Notice and the effective date of the cancellation, MRW sent Tower a Commercial Policy Change Request to change the mortgagee from GreenPoint to Capital One, at a different address from GreenPoint's. It is undisputed that GreenPoint is a wholly-owned subsidiary of Capital One. On September 9, 2010, just days before the effective date of the cancellation, Tower issued an endorsement amending the mortgagee to read Capital One. In addition, the endorsement indicates that the change in the mortgagee designation was made effective as of August 17, 2010, the same day as the effective date of the policy itself.

No additional cancellation notice to Capital One or any other party was issued, and no premium payment was received by Tower by the cancellation effective date. On September 24, 2010, Capital One sent and Tower received a premium check. Tower asserts that on October 14, 2010 it returned to Capital One what it states to be “the unearned premium” after deducting the “earned premium, plus applicable fees.” Wiener Aff., at ¶ 32. Tower also claims it returned additional premiums two more times in April, 2011, after the March, 2011 fire, and declined coverage based on nonpayment of the premium and the Notice.

Shants sued MRW under breach of contract and negligence theories, alleging that it had failed to ensure that the policy remained in effect, which included monitoring payment by the mortgagee bank, to whom Shants made payments of insurance costs. The complaint further alleges that MRW had assured Shants that any changes would be processed, such as the change to Capital One as the mortgagee who would make the premium payments to Tower. Shants admits it was aware of the Notice, but relied to its detriment on MRW to “handle” the situation and that MRW had assured it that MRW would have Capital One make the required premium payment.

Shants sued Tower based on the failure to serve the Notice on the mortgagee under the New York State Insurance Law and the policy, asserting that a failure to serve Capital One is fatal to the vitality of the Notice. It also claimed that Tower had accepted a late payment of the premium sent to Tower by Capital One, thereby vitiating its prior cancellation. Shants thus contends that Tower had wrongfully disclaimed coverage for a loss occurring during the policy period. It seeks a declaratory judgment to that effect.It sued Capital One for failing to make the premium payment.MRW has cross-claimed against Tower and Capital One for contribution or indemnification, and Capital One has moved to amend its answer to assert cross claims against Tower and MRW, also for contribution or indemnification.

In support of its motion, MRW argues that the policy requires the notice of cancellation to be served on the mortgagee at least 10 days prior to the effective date of the cancellation. It thus contends that because Tower did not serve Capital One, the Notice was ineffective, coverage existed on the day of the fire, and thus all claims against MRW should be dismissed inasmuch as all ultimately are based on the absence of coverage. In its cross motion, and in opposition, Tower contends that it properly canceled the policy, entitling it to summary judgment against plaintiff Shants, and dismissal of MRW's cross claim against it for contribution and indemnification. Tower also opposes Capital One's motion to amend, asserting that Tower's sole liability, if any, lies in contract to Shants. It also contends that even assuming that there is a defect in service on the mortgagee, this does not free Shants from the effect of the cancellation, as Shants admits receipt of the Notice and that the premium was not timely paid before the effective date of the cancellation.

The law of summary judgment is well established. This is a drastic remedy which should not be granted where there is any doubt about the existence of a triable issue of fact. Bhatti v. Roche, 140 A.D.2d 660, 528 N.Y.S.2d 1020 (2d Dept.1988). It is nevertheless an appropriate tool to weed out meritless claims. Lewis v. Desmond, 187 A.D.2d 797, 589 N.Y.S.2d 678 (3d Dept.1992); Gray v. Bankers Trust Co. of Albany, N. A., 82 A.D.2d 168, 442 N.Y.S.2d 610 (3d Dept.1981). Even where there are some issues in dispute in the case which have not been resolved, the existence of such issues will not defeat a summary judgment motion if, even when the facts are construed in the nonmoving party's favor, the moving party would still be entitled to relief. Brooks v. Blue Cross of Northeastern New York, Inc., 190 A.D.2d 894, 593 N.Y.S.2d 119 (3d Dept.1993).

Generally speaking, to obtain summary judgment it is necessary that the movant establish its claim or defense by the tender of evidentiary proof in admissible form sufficient to warrant the court, as a matter of law, in directing judgment in its favor. CPLR 3212(b). The burden then shifts to the non-moving party. To defeat the motion for summary judgment the opposing party must come forward with evidence to demonstrate the existence of a material issue of fact requiring a trial. CPLR 3212(b); see also GTF Marketing, Inc. v. Colonial Aluminum Sales, Inc., 66 N.Y.2d 965, 498 N.Y.S.2d 786, 489 N.E.2d 755 (1985); Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718 (1980). The non-moving party must lay bare all of the facts at its disposal regarding the issues raised in the motion. Mgrditchian v. Donato, 141 A.D.2d 513, 529 N.Y.S.2d 134 (2d Dept.1988). Conclusory allegations are insufficient ( Zuckerman v. City of New York, supra ), and the defending party must do more than merely parrot the language of the complaint or bill of particulars. There must be evidentiary proof in support of the allegations. Fleet Credit Corp. v. Harvey Hutter & Co., Inc., 207 A.D.2d 380, 615 N.Y.S.2d 702 (2d Dept.1994); Toth v. Carver Street Associates, 191 A.D.2d 631, 595 N.Y.S.2d 236 (2d Dept.1993).

On such a motion the court must draw all reasonable inferences in favor of the nonmoving party. Nicklas v. Tedlen Realty Corp., 305 A.D.2d 385, 759 N.Y.S.2d 171 (2d Dept.2003); Rizzo v. Lincoln Diner Corp., 215 A.D.2d 546, 626 N.Y.S.2d 280 (2d Dept.1995). The role of the court in deciding a motion for summary judgment is not to resolve issues of fact or to determine matters of credibility, but simply to determine whether such issues of fact requiring a trial exist (Dyckman v. Barrett, 187 A.D.2d 553, 590 N.Y.S.2d 224 (2d Dept.1992); Barr v. County of Albany, 50 N.Y.2d 247, 254, 428 N.Y.S.2d 665, 406 N.E.2d 481 (1980); James v. Albank, 307 A.D.2d 1024, 763 N.Y.S.2d 838 (2d Dept.2003); Heller v. Hicks Nurseries, Inc., 198 A.D.2d...

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1 cases
  • Pennachio v. Hermitage Ins. Co.
    • United States
    • New York Supreme Court
    • July 17, 2013
    ...that it provided plaintiff with proper notice of cancellation, its failure to notify Santander of it is immaterial. (See Shants, Inc. v Capital One N.A., 38 Misc 3d 1217[A], 2013 NY Slip Op 50123[U] [Sup Ct, Nassau County Jan. 31, 2013] [insurance broker's motion for summary judgment declar......

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