Summary
In Federal Ins. Co. v Spectrum Ins. Brokerage Servs., 304 AD2d 316 [1st Dept 2003], the plaintiff was an insurance company subrogee that brought the action against the broker who allegedly failed to procure sufficient coverage for plaintiff's subrogors as additional insureds, and the insurer with which the broker placed the coverage that it did obtain.
Summary of this case from Summit Constr. Servs. Grp., Inc. v. Act Abatement, LLCOpinion
663, 664
April 1, 2003.
Order, Supreme Court, New York County (Karla Moskowitz, J.), entered on or about March 6, 2002, to the extent it granted the motion by defendants Spectrum Insurance Brokerage Services, Inc. (Spectrum) and Joseph Mangano pursuant to CPLR 3211 and 3212 to dismiss the amended complaint as against them so as to dismiss those of plaintiff's claims against Spectrum and Mangano asserted by plaintiff as subrogee of Sablons Investors, Inc. and Bankers Trust New York Corporation, and dismissing the second through sixth causes of action as against Mangano and Spectrum, and order, same court and Justice, entered on or about November 15, 2002, which, inter alia, granted the motion by defendants Spectrum and Joseph Mangano to renew so much of their prior summary judgment motion as had been denied and, upon renewal, granted the motion, dismissing the complaint against them, and granted the cross motion by defendant TIG Insurance Company (TIG) for, inter alia, a default judgment on its counterclaims, unanimously affirmed, with costs.
John M. Downing, Jr., for plaintiff-appellant.
Robert M. Sullivan Aidan M. McCormack, for defendants-respondents.
Before: Nardelli, J.P., Sullivan, Friedman, Marlow, Gonzalez, JJ.
Subrogation entitles an insurer to stand in the shoes of its insured for the purpose of seeking indemnification from one or more third parties whose wrongdoing caused the loss for which the insurer was obligated to pay (see ELRAC, Inc. v. Ward, 96 N.Y.2d 58, 75; Jefferson Ins. Co. of New York v. Travelers Indem. Co., 92 N.Y.2d 363, 373; Trans-Resources, Inc. v. Nausch Hogan Murray, 298 A.D.2d 27, 34). Plaintiff insurer, however, while purporting to sue as the subrogee of its insureds, is not suing the entity responsible for the injuries sustained by the worker in the underlying action. Rather, plaintiff seeks recovery from the broker who allegedly failed to procure sufficient insurance coverage for its subrogors as additional insureds, and the insurer with which the broker placed the coverage that it did obtain. In addition, the broker's duty is to its customer (here, the contractor) and not to additional insureds such as the parties insured by plaintiff (see id. at 172; Am. Ref-Fuel Co. of Hempstead v. Resource Recycling, Inc., 248 A.D.2d 420, 424; see also Glynn v. United House of Prayer For All People, 292 A.D.2d 319, 323; Marson Constr. Corp. v. Illinois Union Ins. Co., 276 A.D.2d 294). Since plaintiff's insureds do not possess a viable claim against the broker defendants, plaintiff may not assert a claim against the broker defendants as its insureds' subrogee. Moreover, plaintiff's insureds suffered no loss. It is clear that plaintiff as subrogee is seeking to recover for its own, not its insureds', loss.
Nor may plaintiff sue as an assignee of the contractor's rights since there is no evidence of any such assignment by the contractor. Even if an assignment could be inferred from the stipulation in the underlying personal injury litigation, any rights that the contractor may have transferred to plaintiff's insureds reverted back to the contractor when the former did not institute an action to enforce those rights within the six-month period set forth in the stipulation.
Plaintiff's challenge to the motion court's grant of that part of TIG's cross motion seeking a default judgment upon its counterclaims is without merit. Plaintiff admittedly did not respond to TIG's counterclaims against it, purportedly on the ground that they were too frivolous to answer. A party is not relieved from answering a counterclaim merely because it deems it frivolous. Plaintiff not only failed to request an extension of time in which to respond to defendant insurer's counterclaims but never submitted an affidavit of merit.
Finally, while we affirm the dismissal of plaintiff's claims for malpractice and/or negligence against the broker defendants, we do so only upon the above-stated grounds and not upon the alternative ground that those causes were time-barred, as the motion court found in the March 6, 2002 order. Contrary to the court's finding, the malpractice and/or negligence causes were not time-barred under the three-year statutory period prescribed in CPLR 214(6) since that statutory period only applies to allegations of "malpractice" and "the alleged misfeasance of insurance agents and brokers toward their clients is not 'malpractice' within CPLR 214(6)" (Santiago v. 1370 Broadway Assocs., L.P., 96 N.Y.2d 765, 766).
We have considered plaintiff's remaining arguments and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.