Williams v. N.Y. Cent. Mut. Fire Ins. Co.

• Decision Date: 05 July 2013
• Citation: 969 N.Y.S.2d 292,2013 N.Y. Slip Op. 05156,108 A.D.3d 1112
• Parties: Angel WILLIAMS and Emery G. Bulluck, Jr., Plaintiffs–Respondents, v. NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY, Defendant–Appellant. (Appeal No. 2.)
• Court: New York Supreme Court — Appellate Division

108 A.D.3d 1112

969 N.Y.S.2d 292

2013 N.Y. Slip Op. 05156

Angel WILLIAMS and Emery G. Bulluck, Jr., Plaintiffs–Respondents,

v.NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY, Defendant–Appellant. (Appeal No. 2.)

Supreme Court, Appellate Division, Fourth Department, New York.

July 5, 2013.

Burgio, Kita & Curvin, Buffalo (Steven P. Curvin of Counsel), for Defendant–Appellant.

Law Offices of James Morris, Buffalo (Willard M. Pottle, Jr., of Counsel), for Plaintiffs–Respondents.

PRESENT: SCUDDER, P.J., PERADOTTO, LINDLEY, AND SCONIERS, JJ.

MEMORANDUM:

Plaintiffs commenced this action pursuant to Insurance Law § 3420(a)(2) seeking a monetary judgment for damages in the underlying negligence action that plaintiff Angel Williams commenced against plaintiff Emery G. Bulluck, Jr. based upon injuries inflicted on her by Bulluck in his home. Bulluck's home was allegedly insured by defendant (property). With respect to the underlying action, defendant had disclaimed coverage on the grounds that Bulluck's assaultive conduct was intentional and that it was not provided with timely notice of the incident, but nevertheless agreed to provide him a defense. Williams and Bulluck settled the underlying action for the policy limit. In its answer, defendant asserted affirmative defenses alleging, inter alia, that the policy does not provide coverage because the incident is not an “occurrence” within the meaning of the policy and plaintiffs failed to provide reasonably prompt notice of the incident, and that Bulluck's intentional actions are excluded from coverage. Following depositions of Bulluck and his mother, the owner of the property, defendant moved for leave to amend its answer to add affirmative defenses alleging, inter alia, that there is no coverage under the policy because Bulluck is not “an insured” under the policy and that, inasmuch as the owner did not live at the property, the incident did not occur at an insured location. Plaintiffs moved for summary judgment in the amount of the judgment in the underlying action and for a declaration that defendant is required to provide coverage to Bulluck. Supreme Court denied defendant's motion seeking leave to amend the answer on the ground that defendant was estopped from alleging that there was no coverage on the bases set forth in the proposed amendment because such an amendment would cause undue prejudice to plaintiffs. The court also granted plaintiffs' motion in its entirety, and thereby declared that defendant was obligated to indemnify Bulluck and granted judgment to Williams in the amount of $122,036.86. We reverse.

It is well established that “ ‘[l]eave to amend a pleading should be freely granted in the absence of prejudice to the nonmoving party where the amendment is not patently lacking in merit’ ” ( Inter–Community Mem. Hosp. of Newfane v. Hamilton Wharton Group, Inc., 93 A.D.3d 1176, 1178, 941 N.Y.S.2d 360;see Edenwald Contr. Co. v. City of New York, 60 N.Y.2d 957, 959, 471 N.Y.S.2d 55, 459 N.E.2d 164). Here, the court denied leave to amend the answer on the ground that Williams had negotiated the settlement in the underlying action with the understanding that defendant was disclaiming coverage on the bases set forth in its disclaimer letter, and the court determined that “[t]o alter the playing field now, after several years of litigation and a judgment, with known strategies and positions in mind, would constitute unfair surprise to the [p]laintiffs and unduly prejudice them.” Although the determination whether to deny a motion for leave to amend a pleading rests within the court's sound discretion, we conclude that, on these facts, the court abused its discretion in denying defendant's motion ( see Holst v. Liberatore, 105 A.D.3d 1374, 1374, 964 N.Y.S.2d 333).

Because it is undisputed that the named insured, Bulluck's mother, did not live at the property and that Bulluck lived alone at the time of the incident, we conclude that the proposed amendment is “ ‘not patently lacking in merit’ ” ( Inter–Community Mem. Hosp. of Newfane, 93 A.D.3d at 1178, 941 N.Y.S.2d 360). We note that, if defendant establishes its proposed affirmative defense that the claim falls outside the scope of the policy's coverage, it would have no duty to provide a timely notice of disclaimer to Bulluck, the purported insured, on that basis ( see Progressive Northeastern Ins. Co. v. Farmers New Century Ins. Co., 83 A.D.3d 1519, 1520, 921 N.Y.S.2d 773;see generally...