Velastequi v. Exchange Ins. Co.
| Decision Date | 29 July 1986 |
| Citation | 505 N.Y.S.2d 779,132 Misc.2d 896 |
| Parties | Frederico VELASTEQUI, Plaintiff, v. EXCHANGE INSURANCE COMPANY and Larry Press, Inc., Defendants. |
| Court | New York City Court |
Siddiqui & Associates, Brooklyn, (Annis A. Siddiqui, of counsel), for plaintiff.
Bergdano, Zichello & Babchik, New York City, (Jeffrey C. Seymour, of counsel), for defendant Press.
This is a motion by the defendant, Larry Press, Inc., for an order dismissing the complaint for failure to state a cause of action against the defendant, Larry Press, Inc., or in the alternative, for an order disqualifying plaintiff's attorney from representing the plaintiff in this action.
This action is brought against the defendant, Exchange Insurance Co., for the alleged wrongful cancellation of an automobile insurance policy issued by it to the plaintiff, and against the defendant, Larry Press., for its alleged negligence in conducting an investigation of an automobile accident, which culminated with the aforementioned cancellation.
On or about January 1, 1985, a motor vehicle owned and operated by the plaintiff, Frederico Velastequi, was involved in an accident. At the time of the accident, plaintiff was insured by the co-defendant, Exchange Insurance Co. On or before February 1, 1985, the defendant, Larry Press, Inc., was given the assignment of investigating this claim and reporting it to the insurance company.
Plaintiff alleges that the defendant, Larry Press, Inc., did not make a meaningful investigation; did not comply with its obligation towards the co-defendant and submitted wrong and malicious reports which caused the co-defendant to cancel the insurance policy.
The novel issue before this Court is what duty, if any, is owed by an independent investigator or adjustor, retained by an insurance company, to the holder of the insurance policy issued by said company.
This Court is constrained to find that no such duty exists.
It is obvious that no privity of contract existed between the plaintiff and defendant, Larry Press. At best, a contract exists between the plaintiff and the defendant, Exchange Insurance Co.; Larry Press Inc., as agent for the insurance company was retained to obtain a statement of facts from the plaintiff.
A statement of facts is a detailed accounting made by the assured to its assurer, of an occurrence, based upon which the insurance company is obligated, by contract, to defend the assured against any claims arising therefrom.
In the case at bar, all services rendered by the defendant, Larry Press, Inc., were performed for the benefit of the co-defendant, Exchange Insurance Co. This does not make the plaintiff a beneficiary of the purpose for which the person procuring the statements was so retained. The primary cause of action lies between the plaintiff and the defendant, Exchange Insurance Co.
"A third person may enforce a contract made by others for his benefit whenever it is manifest from the nature or terms of the agreement that the parties intended to treat him as the person primarily interested." See: Austin v. Seligman, 18 F. 519, 522 (C.C.N.Y.1893)
Although the plaintiff may have been an incidental beneficiary to the aforementioned contract, he did not acquire a legally enforceable right.
"An incidental beneficiary acquires by virtue of the promise no right against the promisor or promisee." Restatement of Contracts § 147.
Since there is no privity of contract between the plaintiff and defendant, Larry Press, Inc., plaintiff's claim must be dismissed.
Plaintiff further contends that the defendant, Larry Press, was "negligent, careless and unprofessional in conducting [a] substandard investigation and did not perform the functions and duties of investigations in accordance with the professional standards prevailing...."
This now raises the issue as to whether an investigator for an insurance company, absent privity of contract, may be held liable to the insured for a negligently prepared statement to the insurance company and, if so, to what limits does that liability extend.
Since the advent of negligence actions, there has been a marked tendency to convert all tort cases into negligence cases and resolve them by negligence doctrines. Negligence actions impose the mildest burdens of any of the tort actions and have provided numerous escapes from the strict liability imposed by medieval tort law.... It is the lowest common denominator to which most tort actions can be reduced with little effort. (See: Green, The Duty to Give Accurate Information, 1965, 12 UCLA L.Rev. 464, 470.)
In terms of legal theory, there is no general duty to use care, just as there is no "negligence in the air". The duty must always be determined with respect to the particular risk to which the victim has been subjected. See: Green p. 472 Supra.
It has been established that negligence requires a duty of care. However, the problem of the persons to whom the defendant may be liable, already difficult in the case of intentional misrepresentation, becomes more acute where it is merely...
To continue reading
Request your trial
-
Lodholtz v. York Risk Servs. Grp., Inc.
...has no direct relationship with the insured. See id. at 925 n. 1. The court cited with approval Velastequi v. Exchange Insurance Co., 132 Misc.2d 896, 505 N.Y.S.2d 779 (N.Y.Civ.Ct.1986), which held that the adjuster's duty was solely to the insurer, and not to the insured.9 See id. at 782.T......
-
Robert Lodholtz, , Inc. v. York Risk Servs. Grp., Inc.
...has no direct relationship with the insured. See id. at 925 n. 1. The court cited with approval Velastequi v. Exchange Insurance Co., 132 Misc.2d 896, 505 N.Y.S.2d 779 (N.Y.Civ.Ct.1986), which held that the adjuster's duty was solely to the insurer, and not to the insured.9See id. at 782. T......
-
M.V.B. Collision Inc. v. Allstate Ins. Co.
...not constitute the basis for liability, which derives solely from breach of the insurance contract. See also, Velastequi v. Exchange Ins. Co., 132 Misc.2d 896, 505 N.Y.S.2d 779 (Civ.Ct., Kings County 1986).Based upon the authority cited above, there are no viable negligence claims here agai......
-
In re Gibson & Cushman Dredging Corp.
...principle of privity does limit the rights of parties to maintain suits in the insurance context."); Velastequi v. Exchange Ins. Co., 132 Misc.2d 896, 505 N.Y.S.2d 779, 780-81 (Civ.Ct.1986) (finding no privity of contract between insured and insurer's adjustor). Second, even assuming arguen......
-
Evaluating the Relationship Between Independent Insurance Adjusters and Insureds: the Case Against Imposing an Independent Duty of Care
...(D. Nev. Apr. 21, 2009); Vargas v. Cal. State Auto. Ass'n Ins. Bureau, 788 F. Supp. 462 (D. Nev. 1992); Velastequi v. Exch. Ins. Co., 505 N.Y.S.2d 779 (N.Y. Civ. Ct. 1986); Koch v. Bell, Lewis and Assocs., Inc., 627 S.E.2d 636 (N.C. Ct. App. 2006); Hudock v. Donegal Mut. Ins. Co., 264 A.2d ......