Opinion
No. 604301/17.
08-08-2017
COSTCO WHOLESALE CORPORATION, Plaintiff, v. UTICA FIRST INSURANCE COMPANY, Defendant.
Gallagher Walker Bianco & Plastaras, LLP, Mineola, NY, for Plaintiff. Farber Brocks & Zane, LLP, Garden City, for Defendant.
Gallagher Walker Bianco & Plastaras, LLP, Mineola, NY, for Plaintiff.
Farber Brocks & Zane, LLP, Garden City, for Defendant.
JEFFREY S. BROWN, J.
The following papers were read on this motion: E File Docs Numbered
Notice of Motion, Affidavits (Affirmations), Exhibits Annexed 3, 12
Answering Affidavit 15
Reply Affidavit 17
Defendant Utica First Insurance Company (Utica) moves by notice of motion pursuant to CPLR 3211(a)(1) and (7) to dismiss plaintiff's complaint.
Plaintiff Costco Wholesale Corporation (Costco) alleges that prior to February 17, 2007, Utica issued an insurance policy to an entity known as Marmac Home Improvement Corp., plaintiff's ice and snow removal contractor, having policy limits of $300,000 per occurrence. Costco was included as an additional insured on the policy. By summons and complaint dated December 18, 2008, Costco was named as a defendant in an action commenced in Supreme Court, Queens County, alleging personal injuries caused by a slip and fall on ice and/or snow in the Costco parking lot on February 17, 2007 (the Queens County action). Upon receipt of the summons and complaint in the Queens County action, Costco tendered its defense and indemnification to Marmac and Utica, who refused to accept such tender. Costco commenced a third-party action against Marmac and Utica seeking to enforce their obligation to defend and indemnify Costco and to accept Costco as an insured under the Utica policy. Costco contends that Utica agreed to defend and indemnify it as an additional insured under the Utica policy and the third-party action was discontinued.
Costco contends that Utica agreed to assign counsel for Costco separate from counsel assigned to represent Marmac, who would be independent, free of conflicts and capable of giving Costco undivided loyalty. At the time Costco's defense was transferred to counsel selected by Utica, the claim in the Queens County action involved soft tissue injuries only, and according to Costco, the exposure was well within the $300,000 occurrence limit of the Utica policy. Costco alleges that following the transfer of the defense, Costco had no contact whatsoever from either Utica or the attorneys during the remainder of discovery. On or about September 21, 2012, Costco was contacted and invited to participate in mediation with Utica and was advised that the plaintiff's claims in the Queens County action had been amended to include back injury and lumbar surgery, thereby increasing Costco's exposure beyond the Utica policy limits. Costco advised Utica that a clear conflict of interest existed and demanded that it be allowed to retain its own counsel at Utica's expense. Utica verbally advised Costco that it could retain its own counsel, but only if Costco agreed to waive Utica's obligation under the insurance contract.
Costco alleges that Utica failed to keep Costco advised of any of the proceedings after assigning its own counsel, completely failed to timely advise Costco that new claims had been presented by the plaintiff in the underlying suit and that Costco faced personal exposure above the Utica policy limits of $300,000, failed to timely advise Costco of its right to retain personal counsel, and deprived Costco of the opportunity to have any meaningful input into the discovery, defense, settlement discussions, or trial preparation. Costco contends that the attorneys appointed to represent Costco were in conflict and had not adequately represented Costco's interests and advanced Utica's interests over Costco's interests. Costco alleges that as a direct and proximate result of Utica's actions, it was compelled to pay $462,500.00 in settlement of the underlying action with a reservations of its rights to pursue relief from Utica. Costco alleges four causes of action sounding in breach of contract, breach of the implied covenant of good faith and fair dealing, bad faith, and violation of N.Y. Insurance Law sections 2601 and 2403 by unfair claims practices.
Defendant contends that plaintiff's claims are barred by a release and satisfaction agreement entered into between Costco and Utica in settlement of the third party Queens County action whereby Costco, who was represented by counsel at the time, released Utica from any and all known or unknown claims arising out of the third-party action. In addition to requiring Utica to defend and indemnify Costco as an additional insured under the policy, the release provided that:
Costco ... in consideration of the sum of Eleven Thousand, Five Hundred 00/100 Dollars ($11,500.00) paid to it by Utica First in full and final satisfaction of any and all claims, known or unknown, and including, but not limited to, all costs and expenses, including but not limited to, attorneys fees, expended or otherwise incurred by or on behalf of Costco in connection with the Underlying Lawsuit or the Third Party Action, hereby releases and discharges Utica First and Marmac, and each of them ... of and from any and all claims, known or unknown, regardless of the nature, basis, or type of such claim, arising out of or in any way in connection with the injury alleged in the Underlying Lawsuit, including, but not limited to, any and all cross-claims that have been or could have been asserted by Costco or Marmac against the other therein, and the claims asserted in the Third–Party Action.
In opposition, Costco contends the release does not discharge Costco's claims in this action because all of the acts and conduct of Utica giving rise to this case took place after the release was executed, and, thus, the presently asserted causes of action did not exist at the time of the release. Further, Costco asserts that the release in issue specifically referenced (and therefore released) only the claims asserted in the third-party action. At the outset, the court finds that Costco's second contention is without merit as the release pertains to "all costs and expenses ... expended or otherwise incurred by or on behalf of Costco in connection with the Underlying Lawsuit or the Third Party action ...." and discharges Utica from any claims, arising out of or in any way in connection with the injury alleged in the Underlying Lawsuit.
Generally, a motion to dismiss made pursuant to CPLR 3211(a)(1) will be granted only if the cited documentary evidence resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim. (See, Fontanetta v. Doe, 73 AD3d 78 [2d Dept 2010], quoting Siegel, Practice Commentaries, McKinney's Cons.Laws of NY, Book 7B, CPLR C3211:10 at 22). The analysis is two-pronged: first, the evidence must be documentary and, second, it must resolve all the outstanding factual issues at bar. Thus, dismissal pursuant to CPLR 3211(a)(1) is appropriate only where documentary evidence utterly refutes the plaintiff's factual allegations, and thereby conclusively establishes a defense as a matter of law ( Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d 314, 326 [2002] ).
"Upon a motion to dismiss for failure to state a cause of action, pursuant to CPLR § 3211(a)(7), the court must determine whether from the four corners of the pleading ‘factual allegations are discerned, which taken together, manifest any cause of action cognizable at law’ " ( Salvatore v. Kumar, 45 AD3d 560, 562–563 [2d Dept 2007], lv to app den. 10 NY3d 703 [2008], quoting Morad v.. Morad, 27 AD3d 626, 627 [2006] ). Further, "the pleading is to be afforded a liberal construction ... the facts as alleged in the complaint accepted as true, [and the court must] accord plaintiffs the benefit of every possible favorable inference ..." ( Leon v. Martinez, 84 N.Y.2d 83, 87–88 [1994] ).
A court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7) (see CPLR 3211[c] ). If the court considers evidentiary material, the criterion then becomes "whether the proponent of the pleading has a cause of action, not whether he has stated one" ( Guggenheimer v. Ginzburg, 43 N.Y.2d [268] at 275 ). Yet, affidavits submitted by a defendant "will almost neverwarrant dismissal under CPLR 3211 unless they ‘establish conclusively that [the plaintiff] has no cause of action’ " ( Lawrence v. Graubard Miller, 11 NY3d 588, 595 [2008], quoting Rovello v. Orofino Realty Co., 40 N.Y.2d [633]at 636 [emphasis and alterations of original quotation omitted] ). Indeed, a motion to dismiss pursuant to CPLR 3211(a)(7) must be denied "unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it" ( Guggenheimer, 43 N.Y.2d at 275 ).
( Sokol v. Leader, 74 AD3d 1180 [2d Dept 2010] ).
Stipulations of settlement "are favored by the courts and are not lightly cast aside." ( Hallock v. State of New York, 64 N.Y.2d 224[1984] ). "Parties by their stipulations may in many ways make the law for any legal proceeding to which they are parties, which not only binds them, but which the courts are bound to enforce. They may stipulate away statutory, and even constitutional rights" (Matter of New York, L. & W.R.R. Co., 98 N.Y. 447 [1985] ).
"The meaning and scope of a release must be determined within the context of the controversy being settled" (Matter of Schaefer, 18 N.Y.2d 314, 317 ; see Kaprall v. WE: Women's Entertainment, LLC, 74 AD3d 1151, 1152 [2010] ). Where a release contains clear and unambiguous language, the signing of it is "a jural act binding on the parties" ( Booth v. 3669 Delaware, 92 N.Y.2d 934, 935 [1998] [internal quotation marks omitted]; see Mangini v. McClurg, 24 N.Y.2d 556, 563 [1969] ; Electronic Bankcard Sys. v. Shiner, 305 A.D.2d 366, 368[203] ). However, a release may not be read to cover matters which the parties did not intend to cover (see Cahill v. Regan, 5 N.Y.2d 292, 299 [1959] ; Wechsler v.. Diamond Sugar Co., Inc., 29 AD3d 681, 682 [2006] ; Stone v. Aronwald & Pykett, 275 A.D.2d 706, 707 [2000] ). Moreover, while a release may encompass unknown claims, it must be clear that the parties so intended by the use of broad, all-encompassing language (see Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 NY3d 269, 276–277 [2011] ). Where a court cannot definitively determine whether the scope of a release was intended to cover the allegations in a complaint, a motion pursuant to CPLR 3211(a)(5) to dismiss the complaint must be denied (see Storman v. Storman, 90 AD3d 895, 898 [2011] ; Kaprall v. WE: Women's Entertainment, LLC, 74 AD3d at 1152 ).
( Desiderio v. Geico Gen. Ins. Co., 107 AD3d 662, 662–663 [2d Dept 2013] ).
In Centro Empresarial Cempresa, S.A. v. America Movil S.A.B. DE C.V., 17 NY3d 269 [2011], the Court of Appeals found that a release of "all manner of actions ... whatsoever ... whether past, present or future, actual or contingent, arising undue or in connection with the Agreement Among Members ..." was broad enough to encompass plaintiff's claims of fraud in connection with providing false financial information impacting valuation of the subject company. ( Id. at 277 ). The Court explained that "a release may encompass unknown claims, including unknown fraud claims, if the parties so intend and the agreement is ‘fairly and knowingly made.’ " ( Id. at 276 ). Significant to the Court's analysis was that the plaintiffs were "large corporations engaged in complex transactions in which they were advised by counsel" and "[a]s sophisticated entities, they negotiated and executed an extraordinarily broad release with their eyes wide open." ( Id. at 278 ; see also Rivera v. Wyckoff Heights Med. Ctr., 113 AD3d 667 [2d Dept 2014] [finding release given in settlement of breach of contract action broad enough to encompass claims for contribution and indemnification in connection with subsequent medical malpractice action] ).
In Kaminsky v. Gamache, 298 A.D.2d 361 [2d Dept 2002], a case cited by Costco, the Court found that a release involving a dispute arising out of an existing rental agreement did not resolve a later dispute concerning the tenant's present and future entitlement to occupy the premises in the absence of a new rental agreement. (Id .["A release may not be read to cover matters which the parties did not intend to cover."]; see also Kemp v. Perales, 199 A.D.2d 320, 321–322 [2d Dept 1993] ["[T]he courts have often ... held that the general words of a release are limited by the recital of a particular claim ... Thus, if from the language of the instrument, it appears that the release is to be limited to certain claims, demands or obligations, then the release will be operative as to those matters only."] ). Here, the plain language of the release discharges Utica from any claims known or unknown, arising out of or in any way in connection with the injury alleged in the Underlying Lawsuit. It is not limited to only certain claims or obligations. The claims asserted in this case arise directly from the defense provided in the underlying litigation. Thus, under the applicable case law, the language of the release is broad and unambiguous and covers the claims of the instant action. Moreover, there is no dispute that the parties were sophisticated entities, represented by counsel at the time of the agreement, and there is no claim that Utica engaged in deceptive or high pressure tactics in procuring the release. (See, Centro Empresarial, 17 NY3d at 278 ; Scotts Co., LLC v. Ace Indem. Ins. Co., 51 AD3d 445, 446 [1st Dept 2008] ).
Turning to the plaintiff's fourth cause of action, defendant correctly points out that there is no private right of action under N.Y. Insurance Law § 2601. (See, Rocanova v. Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 614 [1994] ; Riordan v. Nationwide Mut. Fire Ins. Co., 756 F.Supp. 732, 739 [S.D.NY 1990]. Plaintiff contends that its allegations that "the actions of Utica were committed without just cause and performed with such frequency as to indicate a general business practice" are sufficient to frame a claim pursuant to N.Y. General Business Laaw § 349.
"The elements of a cause of action to recover damages for deceptive business practices under General Business Law § 349 are that the defendant engaged in a deceptive act or practice, that the challenged act or practice was consumer-oriented, and that the plaintiff suffered an injury as a result of the deceptive act or practice" ( Valentine v. Quincy Mut. Fire Ins. Co., 123 AD3d 1011, 1015 ). "A party claiming the benefit of General Business Law § 349 must, as a threshold matter, charge conduct that is consumer oriented," i.e., conduct that has a "broad impact on consumers at large" ( JP Morgan Chase Bank, N.A. v. Hall, 122 AD3d 576, 581 [internal quotation marks omitted] ).
( Nafash v. Allstate Ins. Co., 137 AD3d 1088, 1090 [2d Dept 2016] ).
Here, the complaint does contain allegations that Utica's actions were part and parcel of a general business practice. ( Elaqua v. Physicians' Reciprocal Insurers, 52 AD3d 886 [3d Dept 2008] ). However, as the release executed by the parties in connection with all claims arising out of the underlying lawsuit broadly covers all claims of the plaintiff's complaint, the action must be dismissed in its entirety.
For the foregoing reasons, defendant's motion to dismiss the complaint is granted.
This constitutes the decision and order of this court. All applications not specifically addressed herein are denied.