Antonio Garcia, Appellant,v.Government Employees Insurance Company, Respondent.BriefN.Y.December 7, 2017To be Argued by: RICHARD A. FOGEL (Time Requested: 15 Minutes) Stew flork Supreme Court Appellate dtiitstnn - department Docket No.: 2015-05471 ANTONIO GARCIA, Plaintiff-Respondent, against - GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellant. BRIEF FOR DEFENDANT-APPELLANT LAW OFFICES OF RICHARD A. FOGEL, P.C. Attorneys for Defendant-Appellant 389 Cedar Avenue Islip, New York 11751 (516) 721-7161 Nassau County Clerk’s Index No. 4844/13 STATEMENT PURSUANT TO CPLR 5531 iXeut Supreme Court Appellate Ututaum - §>ttmxb Bÿpartment o ANTONIO GARCIA, Plaintiff-Respondent, - against - GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellant. 1. The index number of the case in the court below is 4844/13. The full names of the original parties are as above. There have been no changes.2. The action was commenced in Supreme Court, Nassau County.3. The action was commenced on or about April 22, 2013, by the filing of a Summons and Verified Complaint. The issue was joined by the Defendants on or about October 15, 2013. 4. The nature and object of the action is to recover damages for an alleged wrongful cancellation of an Umbrella Liability Insurance Contract at 12:01 A.M., on May 19, 2006, with the insured, Jeanne Rakowski. 5. The appeal is from an order of the Honorable Jerome C. Murphy, entered on June 17, 2015. 6. This appeal is being perfected on a full reproduced record.7. TABLE OF CONTENTS QUESTIONS PRESENTED .4 PRELIMINARY STATEMENT .6 UNDISPUTED MATERIAL FACTS. 10 The One Year GEICO Umbrella Liability Insurance Policy Commencing October 10, 2005 had Indemnity Limits of $2 million (R at 50-59), Not $1 Million as Misstated by the Lower Court Ruling 13 The Insured Failed to Pay the Entire Premium for the One Year GEICO Umbrella Liability Insurance Policy Commencing October 10, 2005 with Indemnity Limits of $2 Million 15 PROCEDURAL HISTORY 19 ARGUMENT ,20 Motion for Summary Judgment. .20 Point One: The Lower Court Ruling Misstates the Law of Severability .21 Point Two: The Lower Court Ruling Misstates Undisputed Facts .26 Point Three: GEICO Met the Standard for Summary Judgment .29 CONCLUSION. 32 2 TABLE OF AUTHORITIES Cases Andre v. Pomeroy, 35 N.Y.2d 361, 362 N.Y.S.2d 131 (1974). .30 First Savings and Loan Ass’n of Jersey City, N.J. v. American Home Ass. Co., 29 N.Y.2d 297, 327 N.Y.S2d 609 (1971) .5, 6, 22-23, 25 Fried v. Bower & Gardner, 46 N.Y.2d 765, 413 N.Y.S.2d 650 (1978). ,29 Friends of Animals, Inc. v. Associated Fur Mfrs., Inc., 46 N.Y.2d 1065, 416 N.Y.S.2d 790 (1979). .29 In re Nationwide Mut. Ins. Co., 37 A.D.2d 15, 322 N.Y.S.2d 164 (2d Dep’t 21,261971) Metzger v. Aetna Ins. Co., 229 A.D. 2, 240 N.Y.S. 749 (3d Dep’t 1930) Ming v. Corbin, 142 N.Y. 334, 37 N.E. 105 (1894) .22 ,23 Rhine v. New York Life Ins. Co., 273 N.Y. 1, 6 N.E.2d 74 (1936). .22 Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595 (1980) .29-30 Statutes Ins. Law § 3420, .4 .4, 27CPLR3212. Other Materials .226 Williston, Contracts [3d ed.], § 860, atpp. 253-254, 17 Couch, Insurance [2d ed.], § 65.1 et. seq .22 3 QUESTIONS PRESENTED Should the lower court be reversed for denying appellant/defendant’s motion for summary judgment in this Ins. Law § 3420 action pursuant to CPLR 3212 where there is no dispute as to the substantive allegations of the complaint and as a matter of law: 1. there was no effective umbrella liability insurance contract between GEICO and the insured Jeanne Rakowski with liability limits of $1 million at any time in 2006 as alleged in the pleadings because the one year umbrella liability insurance contract effective October 10, 2005 through October 2006 had unambiguous indemnity limits of $2 million with an unambiguous policy premium of $505; 2. The 2005-06 one year $2 million umbrella insurance contract was terminated pursuant to the terms of the contract at 12:01 A.M. on May 19, 2006 because of the insured’s failure to pay the policy premium; 3. The underlying auto accident injuring the plaintiff occurred after 12:01AM on May 19, 2006. 4. The $2 million indemnity limit is a material term of the one year 2005-06 umbrella liability insurance contract and cannot be 4 changed to a $1 million indemnity limit after the fact by court order. 5. Controlling law from the Court of Appeals cited to the lower court and ignored by it holds that the indemnity limit is a material term of the insurance contract and is not “severable”. First Savings and Loan Ass’n of Jersey City, N.J. v. American Home Ass. Co., 29 N.Y.2d 297, 327 N.Y.S2d 609 (1971). 5 PRELIMINARY STATEMENT In this case arising out of a one year personal $2 million umbrella liability insurance contract that was terminated for non-payment of premium the night before an accident injuring the plaintiff, appellant/defendant GEICO respectfully submits that the lower court decision denying summary judgment to it must be reversed because the lower court misstated the law (R at 6) by ignoring a controlling Court of Appeals case cited to it, First Savings and Loan Ass’n of Jersey City, N.J. v. American Home Ass. Co., 29 N.Y.2d 297, 327 N.Y.S2d 609 (1971) (see R at 413-414), when the lower court held that the unambiguous $2 million indemnity limit is severable from the umbrella insurance contract so that the contract can be changed by court order after the fact to a $1 million insurance policy to match the amount of premium paid for the previous year’s expired contract or match a proposed renewal that was rejected by the insured during negotiations. Moreover, the lower court’s decision (R at 6) completely misstated three key undisputed facts explained below when the lower court decision stated, “[the insured] paid $306 for a $1,000,000 umbrella policy ... [that] was in full force and effect on August 8, 2006 when Garcia was injured...”: (l)The lower court in this case did not comprehend that the $2 million umbrella liability contract at issue (R at 50-59) is a one year contract 6 with one indemnity limit; not a continuing multi-year $1 million umbrella policy changed by endorsement for an additional premium. There was no $1 million dollar umbrella policy ever in effect from October 10, 2005 through the date of cancellation. It was always unambiguously $2 million. The lower court did not understand that the expired one year $1 million umbrella liability insurance contracts for previous years (R at 324-65) are irrelevant and that annual insurance policy renewal proposals and negotiations (R at 366-374) are also irrelevant parole evidence when the contractual terms at issue, the indemnity limit and premium are unambiguous. Ultimately, the parties agreed to a $2 million umbrella policy effective October 10, 2005 (R at 50-59) and what happened in renewal negotiations before that contract became effective is irrelevant parole evidence and hearsay; (2) It is undisputed that nothing relevant to this case happened on August 8, 2006. The lower court’s citation of that date is inexplicable. The umbrella policy was cancelled pursuant to a Notice of Termination for failure to pay the premium at 12:01 AM on May 19, 2006 and the accident occurred later that same day, May 19, 2006. It is further undisputed that the policy became effective October 10, 7 2005 and would have run until October 9, 2006 had it not been terminated for failure to pay the premium. On August 28, 2005, GEICO sent out a proposed renewal to the insured but that is irrelevant in any case. The lower’s court’s citation of August 8, 2006 indicates a complete lack of understanding of the undisputed facts; (3)The lower court, citing the irrelevant testimony of the GEICO umbrella program manager explaining how the unambiguous premium of $505 was calculated, confused the paying of the premium in installments with an unambiguous indemnity limit and further confused installment payments with endorsements. The one year umbrella contract effective from October 10, 2005 had one unambiguous indemnity limit: $2 million. It was not amended or changed by endorsement. It was never $1 million. There was a proposal, prior to the effective date of October 10, 2005 for a $1 million indemnity limit but that was rejected by the insured by counter-proposal. The lower court did not comprehend that if the accident had occurred before May 19, 2006 (the termination date), GEICO would have paid up to $2 million, not $1 million, and the installment payments of the premium are irrelevant to the liability limits and do not make the unambiguous liability limit severable. 8 Thus, the lower court decision completely misstates the applicable law and the undisputed facts of the case. The result is a decision in which the lower court changed the unambiguous liability limits and premium of an umbrella insurance contract to match the amount of premium paid after the fact of accident or otherwise held that GEICO must unilaterally change the liability limits of an umbrella insurance contract after an accident based upon the amount of premium paid. The ruling is obviously wrong, nonsensical and would lead to utter chaos if any insurer or insured attempted to follow the ruling. The decision then goes on to say there is a question of fact without explaining what that question is. Accordingly, GEICO respectfully submits that reversal of the lower court is compelled in this case. 9 UNDISPUTED MATERIAL FACTS On or about August 29, 2005, the insured Jeanne Rakowski, received from GEICO a proposed renewal of her one year 2004-2005 $1 million umbrella liability insurance contract expiring on October 9, 2005. R at 366- 74 (proposed umbrella renewal); R at 84 (Deposition Transcript of Jeanne Rakowski) Pages 15-17; R at 84 (Deposition Transcript of Jeanne Rakowski) Page 20. The insured made a classic counter-proposal by requesting and receiving a new proposed one year umbrella policy effective on October 10, 2005 with indemnity limits of $2 million and adding an additional house to the coverage. R at 84 (Deposition Transcript of Jeanne Rakowski) Pages 15-17; R at 84 (Deposition Transcript of Jeanne Rakowski) Page 20; R at 136 (Pitts Deposition Transcript) at pages 97-98; R at 136 (Pitts Deposition Transcript) at page 103 referring to telephone log (R at 298); R at 136 (Pitts Deposition Transcript) at pages 105-06; R at 136 (Pitts Deposition Transcript) at pages 107-08. Accordingly, on or about August 31, 2005, the insured, Jeanne Rakowski, received the new proposed one year umbrella liability insurance contract numbered P5118238 from GEICO to commence on October 10, 2005, with an unambiguous indemnity limit of $2 million excess of various primary insurance contracts covering a primary residence in Belle Harbor, Queens, a rental residence in Sheepshead 10 Bay, Brooklyn, and two autos, a 2003 Land Rover and a 2001 Mercedes Benz), effective on October 10, 2005, for a premium of $505 total. R at 50- 59 (2005-06 $2 million umbrella policy); R at 84 (Deposition Transcript of Jeanne Rakowski) Pages 15-17; R at 84 (Deposition Transcript of Jeanne Rakowski) Page 20. An unambiguous premium invoice was issued on or about August 31, 2005 by GEICO to Rakowski indicating that the minimum payment due of the $505 total was $306. R at 60. Upon information and belief based upon the undisputed evidence (R at 64) the minimum payment was received by GEICO from Rakowski unambiguously manifesting that the insured accepted the $2 million contract proposal with all its terms and conditions including the premium to be charged and the right of GEICO to unilaterally cancel the insurance contract if there was a failure to pay the premium. GEICO issued a second invoice to Rakowski on or about October 18, 2005 for the premium balance due of $199 to be paid no later than October 27, 2005. R at 61. It is not disputed by plaintiffs or the insured that Rakowski never paid the $199 premium balance owed to GEICO. On or about November 4, 2005, Rakowski was issued an invoice/notice of cancellation stating that if the balance of $199 for the insurance premium was not paid, the $2 million umbrella liability insurance 11 contract would be cancelled at 12:01 AM on May 19, 2006. R at 62. A certificate of mailing is attached (R at 63) and GEICO’s computer database memorializing the mailing is attached (R at 64). There is no evidence that Rakowski ever paid the premium balance due to GEICO. GEICO sent a follow up email to Rakowski on or about May 15, 2006 (R at 65) but received no response. GEICO further attempted to telephone Rakowski after the cancellation on or about May 20, 2006 (R at 65) but received no response. Pursuant to the foregoing facts, the one year $2 million umbrella liability insurance contract was terminated at 12:01 AM on May 19, 2006 for non-payment of premium pursuant to the express clause in the written insurance contract giving GEICO that unilateral right. R at 58, Para. “9”. On May 19, 2006 after 12:01 A.M., Rakowski apparently loaned the Land Rover to an acquaintance and the car was involved in accident resulting in injuries to the plaintiff. R at 36, Paragraph “Ninth”. Subsequently, the plaintiff prevailed in an underlying personal injury suit against the insured and was awarded damages, (based upon the allegations of the instant complaint), of $819,152.90 after additur by the Appellate Division, of which $310,000 was paid by the available primary insurance. R at 35-40. 12 The One Year GEICO Umbrella Liability Insurance Policy Commencing October 10, 2005 had Indemnity Limits of $2 Million (R at 50-59), Not $1 Million as Misstated by the Lower Court Ruline The Complaint alleges (R at 36 at Para. “Eighth”) and the lower court misstates as fact (R at 6), that the insured and GEICO entered into a one year umbrella liability insurance contract with indemnity limits of $1 million commencing October 10, 2005, but that is clearly wrong and not supported by any admissible evidence. The insured testified at her deposition that she requested and received an increase in the indemnity limits of her umbrella liability insurance policy from $1 million to $2 million before the effective date of renewal, October 10, 2005. For the sake of brevity, the testimony is not repeated here and the court is respectfully referred to the testimony excerpted in the Record at 13-15. Thus, the insured requested and received an increase of the indemnity limit from $1 million to $2 million in negotiations before the umbrella policy became effective on October 10, 2005. There was no amendment or endorsement because the renewal was a proposal in August 2005 and it did not become effective by its terms until October 10, 2005 and until the insured accepted the umbrella renewal. Her request to change the limits (and make other changes) is a classic counter-proposal meaning she did not accept the $1 million renewal proposal. She understood that the invoice for 13 the policy would be increased accordingly. The exhibits are entirely consistent with her testimony. See R at 298 (telephone log of request by insured to increase limits from $1 million to $2 million and make changes to umbrella policy); R at 50-59 ($2 million umbrella policy); R at 60 (invoice for $2 million umbrella policy); R at 61 (invoice for balance of $2 million umbrella policy); R at 62 (notice of cancellation for $2 million umbrella policy). There is no evidence to the contrary that supports the substantive allegation in the complaint (R at 36 at Para. “Eighth”) or the lower court decision (R at 6) that there was a $1 million umbrella liability insurance contract commencing October 10, 2005. The insured’s testimony, and the aforementioned exhibits are also one hundred percent supported and consistent with GEICO’s testimony by the Umbrella Liability Insurance Program Manager, Richard Pitts. For the sake of brevity, the testimony is not repeated here and the court is respectfully referred to the testimony excerpted in the Record at 15-18. Thus, GEICO’s testimony, the insured’s testimony and all the evidence in this case are in one hundred per cent agreement that contradict the unsupported allegation in the complaint (Ex. “A” at Para. “Eighth”) and the lower court decision (R at 6) of a $1 million umbrella liability insurance contract that was effective October 10, 2005. Consequently, that claim is not 14 supported by any evidence of admissible quality, and summary judgment on the claim is compelled. The undisputed fact is that the insured requested a change of liability limits to $2 million before the October 10, 2005 effective date of the umbrella liability insurance contract, as well as other changes and the initial proposed renewal of $1 million was rejected. The contract negotiations leading up to the October 10, 2005 $2 million umbrella liability contract are irrelevant parole evidence because the contract that was agreed to by the insured effective on October 5, 2005 had unambiguous liability limits of $2 million and unambiguous policy premium of $505. The Insured Failed to Pay the Entire Premium for the One Year GEICO Umbrella Liability Insurance Policy Commencing October 10, 2005 with Indemnity Limits of $2 Million The complaint alleges that GEICO wrongfully cancelled for non¬ payment of premium the “$1 Million” liability limit umbrella insurance contract effective on October 10, 2005 (R at 39 at Para. “Twenty-First”). This allegation is meritless because in addition to the undisputed fact that there was no $1 million liability limit umbrella insurance contract effective October 10, 2005 (it was unambiguously $2 million), it is further undisputed by all the evidence including the insured’s sworn testimony as well as GEICO’s sworn testimony, that the insured did not pay the entire premium owed for $2 million umbrella liability contract that was effective 15 commencing October 10, 2005. Therefore, GEICO was within its contractual (R at 50 at § VI, Paragraph 9(a)(1)) and legal rights to terminate the $2 million umbrella insurance contract for non-payment of premium. See R at 60 (Invoice 8/31/2005); R at 61 (Invoice 10/18/2005); R at 62 (Notice of Cancellation 11/4/2005); R at 63 (Certificate of Mailing); R at 64 (GEICO computer database entry of cancellation); R at 65 (GEICO Log Entry re: Telephone Call, Follow up email). The insured testified that she has no knowledge if she paid the full amount of the premium for the $2 million umbrella policy, that she never contested GEICO’s cancellation for non-payment of premium and that in fact she habitually (and still does) paid her insurance bills at the last minute, mailing the check on the same date as the due date and had received notices of cancellation of insurance policies for non-payment of premium more than once. For the sake of brevity, the testimony is not repeated here and the court is respectfully referred to the testimony excerpted in the Record at 20- 25. The testimony of GEICO’s Umbrella Program Director, Richard Pitts, was consistent with the testimony of the insured and all the other evidence that there is no evidence that the full amount of the premium for the $2 million umbrella liability insurance contract effective October 10, 2005 was 16 paid. For the sake of brevity, the testimony is not repeated here and the court is respectfully referred to the testimony excerpted in the Record at 26-28. Thus, there was only umbrella contract in effect in 2006 prior to the accident: a one year $2 million policy which was terminated for non¬ payment of premium on May 19, 2006 at 12:01 A.M. (R at 50-59). The accident at issue occurred after 12:01 A.M. It is not disputed that the one year umbrella policy would have paid up to $2 million had the accident occurred before it was terminated for non-payment of premium. There is no evidence that the full amount of the premium for the $2 million umbrella liability insurance policy effective commencing October 10, 2005 was paid and that GEICO’s cancellation was “wrongful”. GEICO testified that it gave the insured numerous notices and opportunities to pay the full amount of the premium and GEICO never received payment. It is undisputed that GEICO has the right in the umbrella insurance contract to unilaterally terminate the policy for failure to pay the premium. The $2 million indemnity limit is unambiguous as is the policy premium. The fact that the previous umbrella policy that expired on October 9, 2005 had a $1 million liability limit for a lessor premium or that there was a proposed and rejected policy renewal for $1 million is totally irrelevant and inadmissible parole evidence in the face of an unambiguous policy term: the indemnity limit and policy premium. It 17 also irrelevant that the insured paid the premium in installments and that the second installment was the same amount of money as the cost of the second million dollars in indemnity coverage. Consequently, summary judgment is compelled against the plaintiff on his allegation that is wholly unsupported by any evidence of admissible quality that the umbrella liability insurance contract was wrongfully cancelled for non-payment of premium. The completely unworkable and non-sensical lower court decision ignored a Court of Appeals controlling precedent cited to it (R at 413-414), changed the indemnity limits after the fact of an accident, relied upon misstated facts, irrelevant, inadmissible hearsay and parole evidence, and therefore it must be reversed. 18 PROCEDURAL HISTORY GEICO moved for summary judgment (R at 7-298) on or about October 14, 2014 after a Note of Issue and Certificate of Readiness (R at 296-97) was filed. Plaintiff filed his opposition (after several extensions agreed to by GEICO) on or about March 19, 2015 (R at 299-402). GEICO filed its reply on or about March 25, 2015 (R at 403-418). The lower court issued its decision on or about June 15, 2015 (R at 3-6) and GEICO filed its Notice of Appeal on or about June 22, 2015 (R at 2). At the time of the filing of this appellate brief, the matter is on for trial and jury selection on September 8, 2015 in Nassau County Supreme Court. 19 ARGUMENT Motion for Summary Judgment GEICO moved for summary judgment because there is no material factual dispute requiring a trial of the substantive allegations of the complaint and the matter must be resolved as a matter of law: a. There was no effective umbrella liability insurance contract between GEICO and the insured Jeanne Rakowski with liability limits of $1 million effective on October 10, 2005 because the umbrella liability insurance contract effective October 10, 2005 had unambiguous indemnity limits of $2 million, not $1 million (R at 50-59). Plaintiffs lower court opposition conceded this. R at 302-303. b. The one year $2 million umbrella insurance contract effective October 10, 2005 (R at 50-59) was terminated pursuant to the terms of the contract at 12:01 A.M. on May 19, 2006 because of the insured’s failure to pay the unambiguous policy premium. Plaintiffs lower court opposition conceded this. R at 304; R at 314, Para. 40. c. The underlying auto accident injuring the plaintiff occurred after 12:01 AM on May 19, 2006. Plaintiffs lower court opposition did not dispute this. 20 d. GEICO testified that the umbrella policy (R at 50-59) would have required it to pay up to $2 million had the policy not been terminated and the lower court opposition did not dispute this. POINT ONE The Lower Court Ruling Misstates the Law of Severability The lower court ruled (R at 3-6) that the unambiguous $2 million indemnity limit is severable from the rest of the umbrella liability insurance contract after the fact of the accident, citing In re Nationwide Mut. Ins. Co., 37 A.D.2d 15, 322 N.Y.S.2d 164 (2d Dep’t 1971), in which the Second Department held that the insurer could not cancel an otherwise fully paid automobile insurance policy where the insured subsequently requested and received an endorsement to the policy to add an additional vehicle for an additional premium, which additional premium was not paid. Nationwide had nothing whatsoever to do with an indemnity limit. In Nationwide, the insurer sent notice of cancellation of the entire policy for the failure to pay the premium for the endorsement for the additional vehicle. Subsequently, there was accident involving the other vehicle that was not the subject of the endorsement. The Appellate Division in Nationwide held that the insurer could only terminate coverage for the additional vehicle because the endorsement was severable. 21 In this case, the lower court misstated the law by ignoring the controlling Court of Appeals precedent cited to it {See R at 413-414), First Savings and Loan Ass’n of Jersey City, N.J. v. American Home Ass. Co., 29 N.Y.2d 297, 327 N.Y.S2d 609 (1971), which held that indemnity limits are not severable rejecting the lower court’s holding of this case. In First Savings, the insured increased the limits of a property policy by endorsement but then failed to pay the premium for the increased limits causing the insurer to terminate the policy. The Court of Appeals explained: Williston, referring to divisible contracts, states that: “A contract is divisible where by its terms, 1, performance of each party is divided into two or more parts, and, 2, the number of parts due from each party is the same, and, 3, the performance of each part by one party is the agreed exchange for a corresponding part by the other party.”' (6 Williston, Contracts [3d ed.], § 860, at pp. 253-254.) Applying these principles, we conclude that the October 21, 1968 endorsement became, as it specifically provided, part of the original insurance contract. (17 Couch, Insurance [2d ed.], § 65.1 et. seq.; Metzger v. Aetna Ins. Co., 229 App. Div. 2, 6; Rhine v. New York Life Ins. Co., 273 N.Y. 1, at 15-16.) The 22 endorsement increased the amount of coverage for the same property and the same risk, namely: damages sustained to the insured premises by fire. Upon the effective date of the endorsement, the insurance company became liable, in the event of a fire, for the full amount of $15,000, even though the additional premium of $119 was not remitted. This added coverage and liability thereunder continued to be in full force and effect for more than four months, ceasing only upon notice of termination for nonpayment of premium. In addition, the cancellation notice specifically referred to policy D7539681 in its entirety. Certainly, under such circumstances, it cannot be said the contract was divisible. (Ming v. Corbin, 142 N.Y. 334, at p. 340-341.) 29 N.Y.2d at 300, 327 N.Y.S2d at 611. The facts of the instant case is even more compelling to deny severability than First Savings, because here the liability limits of the contract were not changed by an endorsement. The one year umbrella contract itself commenced on October 10, 2005 and its indemnity limit was always unambiguously $2 million. It was not changed at any time. The fact that the expiring umbrella contract from the previous year had indemnity 23 limits of $1 million is irrelevant parole evidence as well as hearsay. The fact that GEICO originally proposed a $1 million umbrella contract for the new year is irrelevant. The negotiations leading up to a written contract are not relevant where there is no ambiguity of the meaning of the contract term at issue, the $2 million indemnity limit. Here, the written umbrella insurance contract commencing on October 10, 2005 had an indemnity limit of $2 million at all times and there is nothing ambiguous about that material term. The fact that the insured was permitted to pay the premium in two installments is also irrelevant. The unambiguous contractual term of a $2 million indemnity limit is not made ambiguous by premium payment in installments. The suggestion by the lower court and the plaintiff that the Court can order or that GEICO should have unilaterally amended the policy and changed the liability limits from $2 million to $1 million based upon the partial premium payment is a classic example of “20-20” hindsight reasoning and is completely unlawful and unworkable: The umbrella liability insurance contract does not give GEICOa. the right to unilaterally change a material term such as the amount of indemnity coverage, and certainly does not state when this should occur. The contract, however, does give GEICO the right to unilaterally terminate the contract if the premium is not paid. 24 When should GEICO have made this unilateral changeb. proposed by the opposition? Should GEICO have acted on October 27, when the payment was due, November 4 when the notice was sent or May 19 when the policy terminated? No doubt the opposition would say May 19th but if that was the case what if the insured had a $1.5 million dollar loss on May 18? The insured gets the benefit of $2 million liability limits up to May 19 and then $1 million after May 19 without any compensation to GEICO? Why would anyone bother paying the entire premium if that was the case? Just ask for $2 million and pay for $1 million and you will get the increased limits for more than fifty percent of the year without paying a dime. As the Court of Appeals explained in First Savings, this is not a divisible contract. The lower court ruling would turn New York contract and insurance law on its head and create chaos as insurers would have to unilaterally change policy limits depending on payments made by the insured rather than the material terms of the contract. In all likelihood, the insurance industry would react by requiring all premium payments up front. 25 POINT TWO The Lower Court Ruling Misstates Undisputed Facts The lower court’s decision (R at 6) apparently relying upon the irrelevant parole evidence and hearsay of prior years’ insurance contracts (R at 324-365) and inadmissible (parole evidence and hearsay) renewal negotiations (R at 366-374) leading up to the one year $2 million umbrella insurance contract that became effective October 10, 2005 (R at 50-59) and all kinds of other inadmissible parole evidence (R at 374-391), misstates the facts when it held, “the same principle which dictated the result in Nationwide is applicable to the case at bar. Mrs. Rakowski paid $306 for a $1,000,000 umbrella policy covering two vehicles and her primary residence for the period October 10, 2005 - October 10, 2006. This policy was in full force and effect on August 8, 2006 when Garcia was injured... During the course of the deposition of Rich Pitts on behalf of GEICO, he indicates that the additional unpaid premium of $199.00 was for the sole purpose of increasing the coverage from $1,000,000 to $2,000,000.” The lower court then goes on to state there are “one or more factual questions that exist against the defendant” while failing to identify a single such question. First, the lower court in this case did not comprehend that the $2 million umbrella liability contract effective October 10, 2005 (R at 50-59) is 26 a one year contract with one unambiguous indemnity limit, not a continuing $1 million umbrella policy changed by endorsement for an additional premium. The premium was also unambiguous, $505. There was no $1 million dollar umbrella ever in effect from October 10, 2005 through the date of cancellation. It was always $2 million. The lower court did not understand that the expired one year $1 million umbrella liability insurance contracts for the previous years (R at 324-65) are irrelevant and that annual insurance policy renewal proposals and negotiations (R at 366-374) are also irrelevant parole evidence. Ultimately, the parties agreed to a $2 million umbrella policy effective October 10, 2005 (R at 50-59) and what happened before that contract became effective is irrelevant. Second, it is undisputed that nothing happened on the August 8, 2006 dated cited in the court’s opinion. The umbrella policy effective October 10, 2005 was cancelled pursuant to a Notice of Termination for failure to pay the premium at 12:01 AM on May 19, 2006 and the accident occurred later that same day, May 19, 2006. It is further undisputed that the one year policy would have run until October 9, 2006 had it not been terminated for failure to pay the premium. On August 29, 2005, GEICO sent out a proposed renewal for the umbrella contract effective October 10, 2005 but that proposal was rejected by a counter-proposal from the insured for increased 27 limits and additional coverage. The $2 million indemnity limit and $505 premium charge are both unambiguous material terms of the contract. Thus negotiations leading up to the contract are parole evidence on unambiguous terms and are inadmissible and irrelevant. The lower’s court’s inexplicable citation of August 8, 2006 indicates a complete lack of understanding of the undisputed facts. Third, the lower court, citing additional inadmissible parole evidence on the meaning of unambiguous material terms of the contract, the deposition testimony of GEICO umbrella program manager Rich Pitts explaining how the premium was calculated, confused the paying of the premium in installments with liability limits and endorsements. The lower court did not comprehend that if the accident had occurred before May 19, 2006 (the termination date), GEICO would have paid up to $2 million, not $1 million, and the installment payments of the premium are irrelevant to the liability limits and do make the liability limit severable. Payment of premium in installments does not make the $2 million indemnity limit or the $505 premium ambiguous. Thus, the lower court completely misstates the applicable law and the undisputed facts of the case. T'he result is a decision that appears to permit the court to change the liability limits of an umbrella liability insurance 28 contract to match the amount of premium paid after the fact of accident or otherwise ordering GEICO to unilaterally change the liability limits of an umbrella insurance contract. The ruling is obviously wrong, nonsensical and would lead to utter chaos if any insurer or insured attempted to follow the ruling. Accordingly, GEICO reversal of the lower court is compelled in this case. POINT THREE GEICO Met the Standard for Summary Judgment A motion for summary judgment must be granted if, upon all the papers and proof submitted, a cause of action is not sufficiently established to warrant the case to proceed to trial. CPLR 3212(b). In order to defeat a motion for summary judgment, plaintiff must present proof and submit factual matter of an evidentiary nature sufficient to raise a substantial issue of fact requiring a trial. Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595 (1980); Friends of Animals, Inc. v. Associated Fur Mfrs., Inc., 46 N.Y.2d 1065, 416 N.Y.S.2d 790 (1979); Fried v. Bower & Gardner, 46 N.Y.2d 765, 413 N.Y.S.2d 650 (1978). “Evidentiary nature” means meeting the standards of admissible evidence. Zuckerman, 427 N.Y.S.2d at 598. “Mere conclusions, expressions of hope or unsubstantiated allegations or assertions” cannot defeat summary judgment. Zuckerman, 427 N.Y.S.2d at 29 598. See also Andre v. Pomeroy, 35 N.Y.2d 361, 362 N.Y.S.2d 131 (1974). The instant case is a classic example of “unsubstantiated allegations” because the substantive allegations are meritless and not supported by any facts of “evidentiary nature”. The Complaint (R at 35-40, Para. “Eighth”) alleges that the insured and GEICO entered into a one year umbrella liability insurance contract with indemnity limits of $1 million commencing October 10, 2005, but that is clearly wrong and not supported by any admissible evidence. The complaint further alleges that GEICO wrongfully cancelled for non-payment of premium the “$1 Million” liability limit umbrella insurance contract effective on October 10, 2005 (R at 35-40, Para. “Twenty-First”). This allegation is meritless because in addition to the undisputed fact that there was no $1 million liability limit umbrella insurance contract effective October 10, 2005 (it was $2 million), it is further undisputed by plaintiff (R at 304; R at 314, Para. “40”) and by all the evidence including the insured’s sworn testimony as well as GEICO’s sworn testimony, that the insured did not pay the entire premium owed for the $2 million umbrella liability contract that was effective commencing October 10, 2005. Therefore, GEICO was within its contractual (R at 50-59, § VI, Paragraph 9(a)(1)) and legal rights to terminate the $2 million umbrella insurance contract for non- 30 11 payment of premium. See R at 60 (Invoice 8/31/2005); R at 61 (Invoice 10/18/2005); R at 62 (Notice of Cancellation 11/4/2005); R at 63 (Certificate of Mailing); R at 64 (GEICO computer database entry of cancellation); R at 65 (GEICO Log Entry re: Telephone Call, Follow up email); R at 84-135 (Deposition of Jeanne Rakowski) Pages 17-18, 19-22, 24-25, 29-31, 35-36, 38-41; R at 136-294, (Deposition of Richard Pitts) Pages 108-09, 119, 120- 21, 133-135, 143. There is no material dispute of fact as to the one cause of action pled in the complaint and therefore movant respectfully submits summary judgment is compelled. 31 CONCLUSION Wherefore, appellant/defendant GEICO respectfully requests that the lower court be reversed, summary judgment be granted to it pursuant to CPLR 3212 and that such other and further relief be granted as the court deems just and proper. -fd Richard A. Fogel, Esq. Dated: Islip, N.Y. July 24, 2015 Law Offices of Richard A. Fogel, P.C. 389 Cedar Avenue Islip, New York 11751-4627 (516) 721-7161 (631) 650-5254 (Fax) rfogel@rfogellaw.com Counsel for Appellant/Defendant Government Employees Ins. Co. 32 APPELLATE DIVISION - SECOND DEPARTMENT CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 NYCRR § 670.10.3(f) that the foregoing brief was prepared on a computer using Microsoft Word Type: A proportionally spaced typeface was used, as follows: Name of typeface: Times New Roman Point size: 14 Line spacing: Double Word Count: The total number of words in this brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of citations, proof of services, certificate of compliance, or any authorized addendum containing statutes, rules, regulations, etc., is 5,621. Date: Islip, New York July 24, 2015 Richard A. Fogel, Esq. Law Offices of Richard A. Fogel, P.C. 389 Cedar Avenue Islip, New York 11751-4627 (516) 721-7161 Attorney for Defendant/Appellant Government Employees Ins. Co.