Michael J. Carlson, Sr.,, Appellant,v.American International Group, Inc., et al., Respondents.BriefN.Y.October 18, 20170 To be Argued by: EDWARD J. MARKARIAN, ESQ. Time Requested for Argument: (20 Minutes) STATE OF NEW YORK Court of Appeals APL-2016-00041. MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D’AGOSTINO CARLSON, Deceased, and as Assignee of WILLIAM PORTER, Plaintiff-Appellant, vs. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., Defendants, AMERICAN ALTERNATIVE INSURANCE CO., Defendant-Respondent, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA and DHL EXPRESS (USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., Defendants. Appellate Division Docket Number: CA 13-01599. Niagara County Index No. E143033/11. (Caption Continued on Inside Front Cover.) BRIEF FOR PLAINTIFF-APPELLANT MAGAVERN MAGAVERN GRIMM LLP 1100 Rand Building 14 Lafayette Square Buffalo, New York 14203 Telephone: (716) 856-3500 Facsimile: (716) 856-3390 Of Counsel to: BROWN CHIARI LLP Attorneys for Plaintiff-Appellant 2470 Walden Avenue Buffalo, New York 14225 Telephone: (716) 681-7190 Facsimile: (716) 681-8136 EDWARD J. MARKARIAN, ESQ. JAMES E. BROWN, ESQ. ANGELO S. GAMBINO, ESQ. TIMOTHY HUDSON, ESQ. Of Counsel on the Brief Date of Completion: April 15, 2016. BATAVIA LEGAL PRINTING, INC.— Telephone (866) 768-2100 0 MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D’AGOSTINO CARLSON, and as Assignee of WILLIAM PORTER, Plaintiff-Appellant, vs. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., AMERICAN ALTERNATIVE INSURANCE CO., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, DHL EXPRESS (USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., Defendants-Respondents. Appellate Division Docket Number: CA 14-02027. RELATED LITIGATION Plaintiff-appellant Michael Carlson is not a party to any related litigation. The Appellate Division orders are in all respects final as to him and also as to the defendants. There are no pending motions or ongoing proceedings in this action. After the Appellate Division's decisions in this case, defendant-respondent National Union Fire Insurance Company ("National Union") commenced an action against MVP Delivery and Logistics, Inc. ("MVP") in Erie County Supreme Court (Index No. 814289/2015) seeking a declaration that MVP is not an insured under the insurance policies which are the subject of the appeal to this Court. MVP, the defendant in that action, is not a party to this appeal. Thereafter, MVP commenced an action in New York County Supreme Court (Index No. 650882/2016) against all of the defendants on this appeal seeking a declaration that it is covered under the insurance policies and seeking money damages for bad faith. Plaintiff believes that the Erie County and New York County actions are pending and undecided. Plaintiff has never been a party in either action. TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................ V STATEMENT OF JURISDICTION .................................................................... 1 QUESTIONS PRESENTED ................................................................................ 2 NATURE OF THE CASE .................................................................................... 4 S~'\1" OF ~CiUMENT ............................................................................ <5 STATEMENT OF FACTS a) DHL, the contractor vehicles, and the "h. d " 9 ire auto coverage . .................................................................... .. b) The accident and issues addressed in Carlson I ................................ 11 c) The hired auto provisions of the insurance policies ........................... 13 d) The insurance underwriting materials ............................................... 15 e) The underwriting expert ...................................................................... 19 f) The missing cost-of- hire schedule ...................................................... 25 g) J)HL 's control over MVP and its vehicles .......................................... 27 h) The decisions below ............................................................................ 33 1. The hired auto coverage decisions ............................................... 3 3 2. The Insurance Law §3420 "issued or delivered" decisions ......... 3 8 11 ARGUMENT I. II. THE MOTION TO DISMISS SHOULD HA VE BEEN DENIED BECAUSE (1) THE INSURERS DELIBERATELY INSURED THE CONTRACTOR VEHICLES AS HIRED AUTOS, (2) THE INSURERS FAILED TO DISCLOSE THE COST-OF-HIRE SCHEDULE, AND (3) DAIRYLEA 'S HOLDING SHOULD BE CONFINED TO ITS NARROW FACTS ................................................................................................... 40 a) Plaintiff's claim survives a pleading-stage motion to dismiss . ................................................................................ 40 b) The overwhelming evidence of the intent to insure the contractor vehicles as hired autos . ............................................... 42 c) The underwriter's admission, the payment of premiums and the failure to produce the cost-of hire schedule . ................................ 53 d) "Hired auto" is undefined and ambiguous ........................................ 55 e) The patent ambiguity resulting from National Union's failure to produce the cost-of hire schedule ........................................ 59 f) The Appellate Division erroneously relied upon Dairylea and other inapposite decisions . ........................................................... 61 g) This case is like those where hired auto coverage has been found ........................................................................................... 71 THE MVP VAN WAS BEING USED WITH DHL'S PERMISSION, AND COVERAGE ARISES OUT OF THE POLICY TERMS, NOT FROM RESPONDEAT SUPERIOR ....................................................... 75 a) Permissive use ..................................................................................... 75 111 III. IV. b) That DHL was not vicariously liable for MVP's negligence has no bearing on the question whether the MVP truck was insured under DHL 's policies ..................................................................................... 79 AAIC'S INSURANCE POLICY WAS "ISSUED OR DELIVERED" IN NEW YORK, AND THE APPELLATE DIVISION'S HOLDING TO THE CONTRARY (1) REQUIRES AN OVERTURNING OF THIS COURT'S PRESERVER DECISION, AND (2) UNDERMINES THE REMEDIAL PURPOSES OF INSURANCE LAW §3420 ................................................................ 81 PLAINTIFF'S CAUSES OF ACTION ALLEGING DECEPTIVE BUSINESS PRACTICES, MISREPRESENTATION AND BAD FAITH SHOULD BE RE-INSTATED ................................................................ 90 CONCLUSION .................................................................................................. 94 Attachment A: Policy excerpt showing Symbols of Coverage ....................... A-1 Attachment B: Excerpt from AAIC Appellate Division Brief ........................ A-3 Attachment C: Excerpt from AAIC Appellate Division Reply Brief ............. A-7 Attachment D: Excerpt from plaintiff Appellate Division Brief .................. A-11 IV TABLE OF AUTHORITIES CASES: PAGE 511 W. 232nd Owners Corp. v Jennifer Realty Co. 98 NY2d 144 [2002] .................................................................................... 40 Admiral Ins. Co. v Joy Contractors, Inc. 81 AD3d 521 (1st Dept 2011), modified 1_9 NY3d 448 .......................... 83,88 Album Realty Corp. v American Home Assurance Co. 80 NY2d 1008 [1992] ................................................................................... 50 Alexander v FedEx Ground Package System, Inc. 765 F3d 981 [9th Cir 2014] ............................................................................ 64 American Cas. Co. of Reading, Pa. v Denmark Foods 224 F2d 461 [4th Cir 1955] ....................................................................... 37,68 American Protection Insurance Co. v Airborne, Inc. 476 FSupp2d 985 [ND 1112007] ........................................................ 91,92,93 American Ref-Fuel Co. v Employers Ins. Co. 265 AD2d 49 [2nd Dept 2000] ....................................................................... 82 Amigo Foods Corp. v Marine Midland Bank-New York 39 NY2d 391 [1976] ................................................................................ 40,41 Atlanta International Insurance Co. v Faulkner 821 F2d 649 [6th Cir table 1987], citable under 6th Cir rule 32.1, published at 1987 WL 37796 ........................................................................ 74 Bituminous Cas. Corp. v Travelers Ins. Co. 122 FSupp 197 [US Dist Ct, Minn 1954] ..................................................... 74 Blue Cross and Blue Shield of New Jersey v Philip Morris USA Incorporated 3 NY3d 200 [2004] ...................................................................................... 91 V BP Air Conditioning Corp. v One Beacon Insurance Group 8 NY3d 708 [2007] ....................................................................................... 50 Breed v Insurance Co. of North America 46 NY2d 351 [1978] ..................................................................................... 57 Canal Insurance Co. v Great West Casualty Co. US Dist Ct, Minn, slip op reported at 2013 WL 5275789 ....................... 56,73 Carey v AAA Con Transport Inc. 61 AD2d 113 [3d Dept 1978) ........................................................................ 78 Carlson v Porter and MVP 53 AD3d 1129 [4th Dept 2008] ........................... 4,11,12,13,32,64,66,78,79,92 Chanko v American Broadcasting Companies, Inc. _NY3d _, slip op dee March 31, 2016 [2016 WL 1247664] .............. .40 Chicago Insurance Co. v Farm Bureau Mutual Insurance Co. 929 F2d 372 [8th Cir 1991] ....................................................................... 37,68 Continental Casualty Co. v Rapid-American Corp. 80 NY2d 640 [1993] ..................................................................................... 58 Craig v FedEx Ground Package System, Inc. 335 P3d 66 [Kansas Supreme 2014] ............................................................. 64 Dairylea Cooperative Inc. v Rossa! 64 NY2d 1 [1984] ................................... 2,3,7,34,35,36,37,61,62,63,64,67,69 Dean v Tower Insurance Company of New York 19 NY3d 704 [2012] ..................................................................................... 56 BBC I, Inc. v Goldman, Sachs & Co. 5 NY3d 11 [2005] ......................................................................................... 40 Federal Insurance Company v Executive Coach Luxury Travel, Inc. 128 Ohio St 3d 331 [Ohio Supreme 201 OJ, recons. denied 120 Ohio St 3d 1439 ............................................................. 74 Vl Federal Insurance Co v Ryder Truck Rental 189 AD2d 582 [1st Dept 1993], affd 82 NY2d 909 rearg denied 83 NY2d 830 ....................................................................... 36,67 Fidelity & Cas. Co. v Cosmopolitan Mut. Ins. Co. 33 NY2d 966 [1974] ..................................................................................... 63 Fratis v Fireman's Fund American Insurance Companies 56 Ca1App3d 339 [Cal Ct App 3d Dist 1976) ............................................... 74 General Motors Acceptance Corp. v Nationwide Insurance Co. 4 NY3d 451 [2005] ....................................................................................... 50 Glidden v Farmers Auto. Ins. Ass'n. 571112d 330 [Illinois Supreme 1974]) ......................................................... 58 Granite State Insurance Co. v Transatlantic Reinsurance Co. 132 AD3d 479 [1st Dept 2015] ...................................................................... 41 Gronski v County of Monroe 18NY3d374 [2011] ..................................................................................... 65 JD&K Associates, LLC v Selective Ins. Group, Inc. 118 AD3d 1402 [4thDept2014] ................................................................... 91 Jefferson Insurance Co. ofNew York Travelers Indemnity Co. 92 NY2d 363 [1998] ................................................................. 25,55,60,61,74 Kresse v Home Insurance Company 765 F2d 753 [8th Cir 1985] ....................................................................... 56,65 Leon v Martinez 84 NY2d 83 [1994] ....................................................................................... 41 Vll London Assur. Corp. v Thompson 170 NY 94 [1902] ......................................................................................... 49 Long v State of New York 7 NY3d 269 ................................................................................................... 36 Luizzi v Pro Transport, Inc. US Dist Ct EDNY, 2013 WL 3968736 ........................................................ 74 Lumbermens Mutual Casualty Co. v Morgan 513 So2d 1283 [Fla Ct App 4th Dist 1987], review denied 520 So2d 585 [Fla Supreme] ............................................ 73,77 Makuch v NY Central Mutual 12 AD3d 1110 [4th Dept 2004] ..................................................................... 91 Manchester v Conrad 90 So3d 554 [La Ct App 1st Cir 2012][table] reported at 2012 WL 602185 and authorized for citation at La Code Civ Pro§ 2168, writ denied 88 So3d 471-473 [La Supreme 2012] ......................... 54,60,72,80 Maroney v New York Central Mutual Fire Ins. Co. 5 NY3d 467 [2005] ....................................................................................... 48 Mason v Allstate Ins. Co. 12 AD2d 138 [1960] ..................................................................................... 63 Matter of Field Delivery Serv. [Roberts], 66 NY2d 516 [1985] ................................................................................... 664 Matter of Rivera v Commissioner of Labor 69 NY2d 679 [1986] ..................................................................................... 64 Matza v Empire State Mut. Life Ins. Co. 50 AD2d 554 [1st Dept 1975] ........................................................................ 43 McGrail v Equitable Life Assurance Society 292 NY 419 [1944] ....................................................................................... 43 vm Michaels v City of Buffalo 85 NY2d 754 [1995] ..................................................................................... 58 Miller v Continental Ins. Co. 40 NY2d 675 [1976] ..................................................................................... 56 Mt. McKinley Insurance Co. v Coming Incorporated 96 AD3d 451 [1st Dept 2012] ........................................................................ 44 Murdza v Zimmerman 99 NY2d 375 [2003] ........................................................................... 76,77,78 MV AIC v Continental Nat America Group Co 35 NY2d 260 [1974] ..................................................................................... 78 Nationwide v Erie and Niagara Insurance Association 249 AD2d 898 [4th Dept 1998]. ..................................................................... 53 Noce v Kaufman 2 NY2d 347 [1957] ....................................................................................... 61 Old Republic Insurance Co. v Stratford Insurance Co, 777 F3d 74 [1st Cir 2015], certified question on unrelated issue addressed at A3d [2016 WL 302212, NH Supreme] ............................................ 25,43,55,59,60 Pludeman v Northing Leasing Systems, Inc. 10 NY3d 486, 493 [2009] ............................................................................. 93 Preserver Ins. Co. v Ryba 10 NY3d 635 [2008] ...................................................... 3,8,82,83,84,85,86,87 Sam and Mary Housing Corp v Jo/Sal Market Corp. 100 AD2d 901 ............................................................................................... 36 Scinta v Kazmierczak 59 AD2d 313 [4th Dept 1977] ........................................................................ 43 Sincoff v Liberty Mutual Fire Insurance Co. 11 NY2d 386 [1962] ................................................................................ 49,57 lX Sokoloffv Harriman Estates Development Corp. 96 NY2d 409 [2001] ..................................................................................... 40 Sonoco Buildings, Inc. v American Home Assurance Co. 877 F2d 1350 [ih Cir 1989] .......................................................................... 58 Spoleta Construction, LLC v Aspen Insurance UK Limited _ NY3 d _, slip op March 24, 2016 [2016 WL 113 6297]. ..................... 41 State of New York v Home Indemnity Company 66 NY2d 669 [1985] ..................................................................................... 57 Toops v Gulf Coast Marine, Inc. 72 F3d 483 [5th Cir 1979] .................................................................... 37,65,68 Transport Indemnity Co. v Liberty Mutual Insurance Co 620 F2d 1368 [9th Cir 1980] ..................................................................... 71,72 US Fid & Guar. Co. v Heritage Mut. Ins. Co. 230 F3d 331 [7th Cir 2000] ....................................................................... 37,67 Valley Forge Insurance Co. v Allstate Indemnity Co., NY Sup Ct, Kings Co. 2014, reported at 2014 WL 3689650 .................. 61,74 Westfield Insurance Co. v Nationwide Mutual Insurance Co. 99 OhioApp3d 114, [OH Ct App 2d Dist 1993] ........................................... 74 Wolverine Ins. Co. v State Auto Mut. Ins. Co. 415 F2d 1182 [6th Cir 1969] .......................................................................... 74 STATUTES AND REGULATIONS: CPLR 3211 ...................................................................................... throughout General Business Law§ 349 ......................................................................... 90 Insurance Law§ 3420 ......................................................................... 33,81,94 X Vehicle and Traffic Law§ 388 ................................................................ 76,78 49 CFR 387.9 .................................................................................................. 9 2008 Sess. Law News ofN.Y. Ch. 388 (S. 8610) (McKinney's) ................. 88 OTHER RESOURCES 5 ALR4th 636, When is automobile "used under contract in behalf of, or loaned to, " insured within meaning of "hired automobile" provision of automobile insurance policy" (and Cumulative Supplement) ................................................................... 74 Couch on Insurance, 3 d ed 1997 §22.8 ......................................................................................................... 44 §118.48 ..................................................................................................... 36 §118.49 ..................................................................................................... 36 New York Bill Jacket, 2008 S.B. 8610, Ch. 388 ................................ 83,87,88 PJI 1:77 .......................................................................................................... 61 Prince, Richardson on Evidence § § 11-401-11-405 [Farrell 11th ed] ............................................................................................. 53 Xl STATEMENT OF JURISDICTION This Court granted plaintiff leave to appeal from two orders of the Appellate Division, Fourth Department. The Appellate Division granted defendants' CPLR 3 211 motions, dismissed all of plaintiffs cases of action, and its orders are final (see Order granting leave to appeal at R 4; Appellate Division Orders at R 5-12; motion court orders at R 21-25, 357-363). Jurisdiction for this appeal exists under CPLR 5602(a)(l)(i) and CPLR 5611. The issues raised on appeal are preserved (R 45, 48, 315-316, 330, 341, 1116- 1119, 1737-1762, 1947-1970, 2070-2078, 2277-2333), and were expressly addressed in the written decisions of both courts below (R 5-6, 8-11, 22, 360- 362). 1 QUESTIONS PRESENTED 1. Where plaintiff alleges that the van owned by regional delivery company MVP was insured under the "hired auto" provisions of insurance policies issued to DHL, a global express delivery company, should plaintiffs cause of action survive a CPLR 3 211 dismissal motion, when: ( 1) the insurers failed to produce the "cost-of-hire schedule" which would show whether the MVP truck was covered as a hired auto, (2) underwriting evidence shows that DHL and the insurers intended that MVP's trucks be insured as hired autos under DHL's policies, (3) such coverage was required for compliance with federal law, and ( 4) MVP and its trucks were strictly controlled by DHL? Answers below. The IAS court said yes and denied defendants' motions to dismiss, but the Appellate Division disagreed, determining as a matter of law that the MVP truck could not be insured as a hired auto. 2. Does this Court's Dairylea decision require that hired auto coverage be erased for the fleets of contractor vehicles (including MVP's) hired and controlled by DHL under the terms of rigid cartage agreements, where the insurers sold the coverage to DHL, federal law required additional coverage for the contractor fleets, and the insurers deliberately calculated the premiums for the coverage which DHL paid? 2 Answers below. The IAS court held that Dairylea did not apply, but the Appellate Division disagreed and erased the coverage. 3. Was the MVP truck driven with DHL's permission? Answers below. The IAS court said yes, because the driver had MVP's consent which was imputed to DHL as hirer of the truck, but the Appellate Division disagreed. 4. Was the AAIC policy issued for delivery in New York State, so that AAIC is subject to suit under Insurance Law §3420? Answers below. The IAS court said yes, because DHL conducts business in New York and creates risk here. The Appellate Division disagreed, in effect overturning this Court's Preserver decision and undermining the purpose of Section 3420, which is to allow plaintiffs to recover directly against the tortfeasor' s insurer. 5. Should plaintiffs causes of action for deceptive business practices, bad faith and misrepresentation survive the motions to dismiss? Answers below. The IAS court upheld plaintiffs deceptive business cause of action but dismissed the others. The Appellate Division dismissed all claims. 3 NATURE OF THE CASE Defendant DHL Express (USA), Inc. ("DHL") is a world-wide overnight delivery service. DHL hired MVP Delivery and Logistics, Inc. ("MVP"), which made deliveries to DHL's customers from DHL's Buffalo, New York depot. MVP's fleet of vehicles was used exclusively for making DHL's deliveries. The MVP vehicles were garaged at and received their cargo at DHL' s facilities. DHL rigidly controlled MVP and its vehicles. An accident caused by an MVP vehicle led to the tragic death of Mrs. Claudia Carlson. Wrongful death and personal injury damages were awarded in Carlson v Porter and MVP (53 AD3d 1129 [4th Dept 2008]) (hereafter "Carlson I") for the benefit of Mrs. Carlson's survivors, including her three children, who were young infants at the time of her death. The judgment remains mostly unpaid (R 383-384, 491-498, 1501). The disclosed insurance coverages were grossly deficient to satisfy the judgment. A post-judgment investigation identified additional insurance coverage for the MVP vehicle and driver involved in the accident. The coverage existed under DHL's commercial automobile policies, and should have been disclosed to satisfy the Carlson I judgment, but was not. Plaintiff commenced this action against the defendants, including National Union Fire Insurance Co. ("National Union") and American 4 Alternative Insurance Co. ("AAIC"), the insurers which had issued the policies to DHL covering the MVP vehicle and driver. Plaintiffs suit against the insurers was authorized by Insurance Law §3420, which allows a judgment holder or assignee of an insured to seek direct recovery from the insurers. In the limited period of time before defendants moved to dismiss plaintiffs action, plaintiff was able to discover underwriting documents prepared in connection with DHL' s insurance policies. This underwriting evidence shows that vehicles operated throughout the country by DHL's contractors - including MVP-were to be insured under the "hired auto" provisions ofDHL's policies. Premiums were charged and paid for this coverage. Hired autos were expressly contemplated in the policy document. The cost-of-hire schedule in the policy- a common policy section - states that the completed cost-of-hire schedule is "on file with company." That cost-of-hire schedule would confirm whether MVP's vehicles were insured as hired autos, but it has never been disclosed by the insurers. Without disclosing it, and before discovery was complete, defendants filed CPLR 3211 motions to dismiss (not summary judgment motions), seeking dismissal of plaintiffs complaint. The motions were heard at Niagara County Supreme Court (Boniello, III, J.). 5 The motion court dismissed plaintiffs causes of action for bad faith and misrepresentation, but upheld all other causes of action in plaintiffs complaint, including the claim seeking payment under the "hired auto" provisions of DHL's policies. The insurers then appealed to the Appellate Division, Fourth Department (Centra, J.P., Cami, Lindley and DeJoseph, JJ.), which determined as a matter of law that the MVP vehicle involved in the accident was not insured as a hired auto. In a separate order, the Appellate Division also held that insurer AAIC was not subject to suit in New York under Insurance Law §3420. Plaintiff moved for leave to appeal from both Appellate Division orders. This Court granted leave. SUMMARY OF ARGUMENT "Hired auto" insurance coverage provided under a business automobile policy insures vehicles which are not owned by the named insured but are used, under contract, on behalf of the named insured. Courts should not cancel a valid agreement providing hired auto coverage, nunc pro tune, after a loss has arisen, when the underwriters deliberately calculated premiums for the coverage, the premiums were paid and the coverage established. That happened in this case, and if the Appellate Division's decision is permitted to stand, it threatens to void countless coverages, create windfalls for insurers, and shift the risk of loss onto 6 New York's drivers rather than on the insurers who were paid to provide coverage. Such insurance cancellation most certainly should not occur on a pleading-stage motion to dismiss, on a limited record, where the crucial cost-of- hire document has not been disclosed. Even with limited discovery, extensive underwriting evidence demonstrates that DHL and the insurers intended hired auto insurance coverage to exist for MVP's vehicles. DHL purchased it. Such coverage is established under the "hired auto" provisions ofDHL's policies. Nonetheless, the Appellate Division ruled that the insurers, who deliberately calculated and were paid premiums for writing the coverage, did not have to cover the risk when it actually occurred. Expansively interpreting narrow language from this Court's decision in Dairylea Cooperative, Inc. v. Lumbermens Mutual (64 NY2d I [1984]), the Appellate Division held as a matter of law that notwithstanding the terms of the policies, and the intent of the parties and underwriters, "hired auto" coverage did not extend under DHL's policies to the contractor fleets it controlled under cartage agreements. The Appellate Division made this determination, on a pleading-stage motion to dismiss, without requiring disclosure of the cost-of- hire schedule incorporated into the insurance policy, even though it would show 7 whether the MVP van was covered as a hired auto under DHL's policies. This was fundamental error. The Appellate Division also erred when, in a separate order, it held that AAIC was not subject to suit in New York under Insurance Law §3420. In making that determination, the Appellate Division employed an analysis that neither AAIC nor plaintiff had urged. It misinterpreted an amendment to Insurance Law §3420, and for its interpretation to be correct, this Court's decision in Preserver Ins. Co. v Ryba (10 NY3d 635 [2008]) would have to be overturned. Moreover, the Appellate Division's interpretation of Insurance Law §3420 -which is a remedial statute allowing direct suit against an insurer for the amount of an unpaid judgment - would allow any insurer to avoid exposure to suit under Section 3420 and defeat the purpose of the statute simply by moving their offices out of New York State and delivering their policies to a non-New York office of their insured. Reversal of both Appellate Division orders is required. 8 STATEMENT OF FACTS a) DHL, the contractor vehicles, and the "hired auto" coverage. DHL is an overnight express delivery company, competing with Federal Express, UPS and similar deliverers (R 1804). DHL delivers packages and even hazardous materials nationally and internationally (R 446, 457, 468, 1804). Under its business model, more than 50% of the vehicles used for making DHL's deliveries are owned by "contractors," and not DHL. These are dedicated contractors, who work exclusively for DHL (R 1803). The vehicles, employees and operations of the contractors are rigidly controlled by DHL under strict cartage agreements. MVP was DHL's delivery contractor based out ofDHL's Buffalo, New York depot. Contractors make deliveries within a 300 mile radius of their depots (R 2001). DHL' s cartage agreements require that its contractors transport hazardous materials as defined under federal law (R 446, 457, 468). Federal law requires that vehicles which may transport hazardous materials must have at least $5 million of liability coverage (49 CFR 387.9), but DHL only requires that its contractors purchase coverage of $1 million (R 439, 2001, 2008). The Record shows that DHL provides the additional required coverage for the contractor vehicles under a "fronted insurance arrangement," which reduces the cost of the insurance (R 1950). The Record shows that this coverage for the contractor 9 vehicles is provided under the "hired auto" provisions ofDHL's business automobile policies (R 1952-1953, 1957). Undisputed evidence from the insurers' underwriting files shows that DHL' s insurers calculated the premiums to cover the contractor vehicles as hired autos, that premiums for the coverage were charged, and that DHL paid them. Even after only limited discovery, the evidence overwhelmingly demonstrates that the contractor vehicles were intended to be covered as "hired autos" under DHL's policies. Moreover, DHL's primary policy refers to a "cost- of-hire" schedule. Cost-of-hire schedules identify, by cost and State, the amounts the insured pays for its hired autos. This schedule would provide the information showing whether MVP's trucks were insured as hired autos under DHL' s policies. However, in the limited period of time before defendants brought their motions to dismiss, they did not produce the "cost-of-hire" schedule. Despite non-disclosure of the cost-of-hire schedule, and the extensive proof establishing that DHL' s insurers intended to insure DHL' s contractor vehicles under the hired auto provisions of its policies, the Appellate Division determined, as a matter of law on a pleading-stage motion to dismiss under CPLR 3211, that the contractor van which struck plaintiff Claudia Carlson's vehicle, causing her death, was not insured as a hired auto under DHL's policies. 10 b) The accident and issues addressed in Carlson 1 On July 7, 2004, MVP's Freightliner van, operated by MVP employee William Porter, crossed double yellow lines on Niagara Falls Boulevard in the Town of Wheatfield, New York, and struck Mrs. Claudia Carlson's vehicle head-on (R 32, 280, 1534). Thirteen days later, due to the injuries she sustained from the collision, Mrs. Carlson died. Mrs. Carlson had been a certified public accountant. She was survived by her husband, Michael J. Carlson, Sr., and by her three infant children, M D and H , respectively ages 7, 5 and 1 at the time of the accident (R 1534, 2161 ). Plaintiff commenced an action ("Carlson I") to recover for Mrs. Carlson's pain and suffering, and for wrongful death damages. Upon trial of Carlson I, a jury rendered a verdict in favor of the Carlson family, and against MVP, Porter and DHL, in the amount $20 million (R 1177- 1181 ). On its verdict sheet, the jury expressly found ( 1) that DHL substantially controlled day-to-day operations of MVP, and (2) that DHL substantially controlled the delivery operations of MVP (R 1178). The defendants in Carlson I appealed to the Appellate Division, Fourth Department (53 AD3d 1129 [Centra, J.P., Lunn, Peradotto, Green and Pine, JJ.], Iv denied 11 NY3d 708). The Appellate Division did not disturb the jury's findings that DHL controlled the day-to-day and delivery operations of MVP. 11 The court did, however, set aside the verdict against DHL on the ground that it could not be held vicariously liable for the accident under respondeat superior because Mr. Porter, the MVP driver, was on a personal errand and not making a delivery at the time of the accident (see Carlson I, 53 AD3d at 1131). MVP remained statutorily liable, however, because Porter was operating MVP's vehicle with its permission at the time of the accident (53 AD3d at 1132). Although Carlson I found that DHL was not vicariously liable to pay the judgment in plaintiffs favor, Carlson I did not address whether MVP and its driver - which were liable for the judgment - were insured under the hired auto provisions ofDHL's policies. Carlson I also held that the damages awarded by the jury were excessive and ordered a new trial unless plaintiff stipulated to a judgment amount of $7.3 million, which plaintiff did. The judgment in plaintiffs favor remains mostly unsatisfied. Only MVP's insurer, under a policy providing $1 million of coverage, has made payment toward the amount owed (R 1501). 12 c) The hired auto provisions of the insurance policies. After payment to plaintiff under MVP's policy, plaintiff investigated whether MVP and Mr. Porter were covered under DHL's policies. It was learned that DHL' s policies provided coverage for drivers and owners of vehicles that DHL had "hired." Under the terms of a 57-page strict cartage agreement, DHL had hired MVP and its vehicles to make DHL' s deliveries. Plaintiff thus commenced this action contending that judgment debtors MVP and Porter were insureds under DHL' s policies and seeking payment of the balance owed under the Carlson I judgment. The action was commenced under Insurance Law §3420(a)(2) and (b), which allows a judgment holder to bring a direct action against an insurer if a judgment against its insured remains unsatisfied. DHL's primary insurance policy was issued by defendant National Union. Its policy No. 9798551 provided coverage in the amount of $3 million (see R 1811 ). That policy provided "hired auto" coverage to persons other than the named insured (i.e. other than DHL) under the following provision: 13 Who Is An Insured The following are "insureds": a. You [ meaning DHL as the named insured] for any covered "auto". b. Anyone else [i.e. parties other than DHL] while using with your permission a covered "auto" you own, hire or borrow ... [ with inapplicable exceptions] * * * [and] c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability. (R 1815-1816 [ emphasis added]). The above-quoted language provides that the driver of a truck hired by DHL is insured under DHL' s policy because such driver is "anyone else" using a truck which DHL has "hired." This makes the truck driver an insured. The coverage is then extended to the truck owner under paragraph "c" of the above- quoted language, which provides coverage to persons "liable for the conduct of an insured." The truck owner is liable for the truck driver (paragraph c ); the truck driver is an insured (paragraph b ); so the truck owner is an insured (paragraph c ). The quoted policy section thus provides hired auto coverage to both drivers and owners of the trucks which DHL hires. Additional hired auto coverage exists under an Excess insurance policy which DHL purchased from defendant AAIC (Policy No. 01-A2-FF-0000083- 14 01 ). The AAIC policy provides additional coverage in the amount of $2 million. It is "a follow-form excess policy," meaning that it provides coverage to the same insureds covered by the underlying primary policy (R 1852). Still further hired auto coverage is provided under National Union Umbrella Policy No. 2860582, which, like the primary policy, provided excess coverage to vehicles "hired by [DHL] or on [DHL' s] behalf and used with [DHL's] permission" (R 1870). The umbrella policy provides coverage in the amount of $23 million (R 522, 1863-1866). d) The insurance underwriting materials. Underwriting materials demonstrate that the insurers consciously set out to provide coverage for the vehicles used by DHL' s contractors. It was provided under the hired auto provisions ofDHL's policies. Premiums were calculated and charged for the coverage. In 2003, DHL merged with Airborne, Inc., another express delivery company (R 1975). Before the merger, Airborne used "contractor vehicles" to make its deliveries, and after the merger DHL continued this practice. Before the merger MVP was a contractor for Airborne, and afterwards a contractor for DHL. As part of the Airborne/DBL merger, Airborne's insurers agreed to insure DHL under Airborne's policies (R 1975). In 2004, before the accident 15 which resulted in Mrs. Carlson's death, the insurance policies were re-issued in DHL's name (R 1810). Underwriting documents for these policies show that the insurers intended to insure the contractor vehicles - such as MVP's - as hired autos. The underwriters: 1. requested and reviewed the cartage agreements by which Airborne and DHL controlled the contractor vehicles; 2. counted the number of contractor vehicles; 3. discussed the extent to which the contractor vehicles were covered under the contractors' own policies (up to $1 million); and 4. discussed the extent to which the contractor vehicles would be covered under DHL 's policies (for amounts in excess of$1 million). That the underwriters intended that the contractor vehicles be covered under DHL's policies is shown by document and email exchanges among the underwriters, including the following: November 19, 2002: Memo with attachment of"Cartage Agreement for contractors requirements for insurance" (R 2006). November 19, 2002: Email stating: "I have reviewed the submission and ... have a few additional questions. The submission states that there are 15,000 vehicles with 7,283 owned, which leaves 7,717 for non-owned. It also states that the radius for the non-owned (independent contractors) is 300 miles. We will need confirmation of this. We will also need the breakout 16 of vehicles. The reinsurers will require this and charge for this. With the required limits of only $IM for the independent contractor vehicles, we should consider putting a retained amounts endorsement. Please confirm that the u/1 policy provides $2M CSL for these vehicles" (R 2001 ). November 19, 2002: Email stating: "Can confirm the primary picks up NO [ non-owned] and Hired fleet, they are also required to carry $1 ml per this contract, [ with umbrella] attaching at $3ml" (R 2001 [emphasis added]). November 25, 2002: Email noting that the cartage agreements had been provided for consideration. "Attachment/Pricing - confirmed ... that we are contemplating the Hired/Non Owned aspect of the auto. Confirmed the following info for exposures: .... [C]ontract drivers carry own $1ml which is primary to Airbom limit. Owned Auto breakdown-PP 604 Vans 4336 ... Non Owned auto - ... fleet is 75% econoline vans, 25% medium trucks." (R 1991). November 26, 2002: Email among underwriters: The submission states that there are "15,000 radio-dispatched delivery vans and trucks, of which approximately 7,283 are owned. . . . Independent contractors provide the balance of pickup and delivery services" (R 1987). December 2, 2002: "This year owned total count is 7287" (R 1985). 17 December 3, 2002: Email from National Union vice president Robert Osborne discussing reinsurance for Airborne for "comprehensive auto liability, non-owned & hired" (R 1979). December 6, 2002: "Broker is faxing state breakdown to me. Please note the loss info does not include the first dollar losses for non owned exposures as the operators all have their own placements" (R 1982). December 6, 2002: "I have one more question .... Are all losses from the independent contractors included from first dollar within the loss exhibit? I want to double check we are not seeing just the losses that have eclipsed the $ IM COi each holds" (R 1981 ). December 6, 2002: Underwriter email: "Please note the loss info does not include the first dollar losses for non owned exposures as the operators all have their own placements" (R 1982). Other underwriting documents show that the underwriters not only calculated premiums for the vehicles which Airborne and DHL owned, but also calculated separate premiums for insuring the contractor vehicles under Airborne's and DHL's policies. For example, an underwriter email shows "a premium of [$936,000] for the owned units, and [$432,000] for non-owned" (R 2016). The documents also include a handwritten note from underwriter Barry Flynn, which states: 18 Note that we have included the non-owned exposure of independents driving their own vehicle. In addition all independents are required to carry $1 million in limits which would increase the umbrella attachment point for such vehicle (R 2008, 2017-2018). A premium calculation worksheet pertaining to coverage under DHL's policy for the "independently operated vehicles" also contained a handwritten note from adjuster Barry Flynn (R 2013, 2019). This worksheet similarly shows that National Union was calculating premiums to charge DHL for insuring the "independently operated vehicles" (R2013, 2019). e) The underwriting expert. Affidavits sworn to by an insurance underwriting expert who analyzed DHL' s insurance policies and the underwriting materials further establish that DHL' s "hired auto" coverage extended to the MVP truck. Carolyn Miller is a chartered property and casualty underwriter, and a licensed risk management consultant (R 1947-1971, 2070-2079). She has over 40 years of experience, has served as adjunct faculty for teaching and writing, and has been awarded prestigious designations, including the Chartered Property Casualty Underwriter designation achieved following a rigorous course of study (R 1947-1948). Miller reviewed the insurance policies and the underwriting materials which plaintiff obtained before defendants' motions 19 curtailed discovery. She concluded that the MVP vehicles - including the one involved in the accident - were covered under the "hired autos" provisions of DHL' s policies, and that the MVP driver was a permissive user of the vehicle (R 1949). The expert made the compelling point that "there simply would be no need to assess the risks and underlying insurance coverage for the contractor vehicles if they were not covered as 'hired autos' under the insurance policies" (R 1958). Because the insurers did assess the risks and coverage for the contractor vehicles, manifestly they were insuring them. As examples of the insurers' deliberations concerning coverage for the contractor vehicles, the expert referred to (1) the underwriter emails showing they were counting not only the 7,283 vehicles owned by Airborne/DBL, but also the 7,717 contractor vehicles, (2) the discussion in the underwriter emails about the "'primary picks up' ... [which] mean[t] that the primary policy provides insurance coverage for the non-owned and hired fleet" for amounts in excess of the contractors' own insurance, and (3) the underwriter emails addressing the "attachment points" for the coverage on the contractor vehicles (R 1955-1958). The expert explained that "a different attachment point allowed the underwriters to rate independent contractor vehicles lower than owned vehicles and reduce the insurance premium" for the contractor vehicles (R 20 1957). That is why the underwriters prepared worksheets - which are included in the Record - showing that coverage for the contractor vehicles had an "attachment point" of $1 million (R 1958, 1980, 2009). This is further confirmed by underwriter Barry Flynn's handwritten note on a premium summary sheet confirming that independent contractors like MVP were covered, that the exposure for those vehicles had been assessed, and that the attachment point for those vehicles was higher because they had their own coverage of $1 million (R 1958-1959, 2008, 2009). There were thus "different attachment points and therefore different rating values for owned versus independent contractor vehicles" (R 1958). Of course, there would have been no need for the underwriters to consider the higher attachment point - and lower rate - for the contractor vehicles if the contractor vehicles were not being insured under DHL's policies (R 1958). They were indeed covered, and covered as hired autos, because hired auto coverage provided the only category of coverage under which the contractor vehicles could be insured under DHL's policies (R 1952-1953). The underwriting expert explained that non-owned and hired coverage is standard for a commercial automobile insurance policy (R 1952). Indeed, during the underwriting ofDHL's policies, AIG Vice President Robert Osborne 21 directed that "coverage [is] to include comprehensive auto liability, non-owned and hired" (R 1952, 1979). The underwriting expert traced the 9 categories of business automobile coverage, referred to as coverage "Symbols," based upon standard policy language ( see R 1814; see also Attachment A to this brief containing page from policy defining the 9 Coverage Symbols). The expert explained that, under the National Union primary policy, "hired auto" coverage is "Symbol 8 coverage," with Symbol 8 defining "hired auto" as "a vehicle which the named insureds lease, hire, rent or borrow" (Attachment A; R 1952; see also 1814). The expert explained that the vehicles insured under Symbol 8 coverage "are the vehicles the named insureds pay to control through a contractual agreement" (R 1952). "This does not mean that the named insureds must make every decision regarding the manner and means of how the hired fleet operated, but that the named insureds have the right to control the overall operations of the hired fleet" (R 1952). The expert also indicated that there is no requirement for Symbol 8 hired auto coverage that the contracted vehicle be used in connection with the named insureds' business at the time of an accident to be covered. When a vehicle "is a 'hired auto' it is considered a 'hired auto' for the entire time it is contracted," including times when it is not being used for the named insured's business (R 1953). Symbol 8 "hired auto" coverage is thus 22 different from Symbol 9 non-owned coverage for employee vehicles, because Symbol 9 expressly states that employee vehicles are only covered while used in the course of the named insured' s business ( see Attachment A hereto and R 1814). Importantly, the expert explained that contractor vehicles - including MVP's - could only be covered under Symbol 8, which provides coverage for hired autos (R 1952-1953). The other categories of coverage are for vehicles which DHL owned, or for employee vehicles (R 1952-1953, 1957; see also 1814 and Attachment A hereto). Because hired auto coverage was the only type which could insure the contractor vehicles under DHL 's policies, the underwriting documents indicating the contractors were being insured establish that they were being covered as hired autos. The insurance expert also indicated that the control DHL exercised over the MVP vehicles pursuant to the cartage agreement was the type of control viewed in the insurance industry as creating a "hired fleet for a cartage company" such as DHL (R 1953-1954). "It is understood in the insurance industry that pursuant to such an agreement, those vehicles become hired autos which are covered under the hiring company's insurance policy if it provides for hired auto coverage" (R 1956). That is why the underwriting evidence shows the cartage agreement being sent to the National Union underwriter (R 23 1955, 2006). "The purpose of providing the cartage agreement to AIG/National Union was to show that these vehicles were covered autos under the policies as 'hired autos' and to confirm that independent contractors were required to carry $1,000,000 of underlying insurance coverage for these covered autos, which affected the attachment point on the policies" (R 1955). Plaintiffs expert observed that with respect to just the umbrella policy, a premium of$432,000 was charged to DHL to insure the hired fleet (R 1959; see also 2016). This was a significant premium given that exposure under this umbrella existed only for claims in excess of the $5 million of underlying coverage. DHL' s paying to cover the hired fleet defeats the argument that no coverage existed (R 1959). The expert also explained that the very purpose of hired auto coverage is to provide coverage to parties other than the named insureds. That is the point of the coverage; "it extends to entities in addition to the named insureds," and "is standard practice in a commercial automobile insurance policy" (R 1960). Indeed, coverage is expressly provided to "anyone else, while using with [the insured's] permission a covered auto, [the insured] own[s], hire[s] or borrow[s]" (R 1961; see also 1815). The coverage is not for the vicarious liability of the named insured. It covers some other party - "anyone else" - and not the named insured. This type of coverage can be negated by an endorsement, but "[n]o 24 such endorsement exists on the primary or excess policies" issued to DHL (1619). The opinions of plaintiffs underwriting expert were unrebutted. The insurers offered no expert proof. Nor did they present an affidavit from an officer or anyone from their companies stating that hired auto coverage did not exist for the MVP vehicle. f) The missing cost-of-hire schedule. A "cost-of-hire" schedule "is a term within the four corners of the insurance policy and cannot be ignored" (Old Republic Insurance Co. v Stratford Insurance Co., 777 F3d 74, 81 [1st Cir 2015], certified question on unrelated issue addressed at_ A3d _ [2016 WL 302212, NH Supreme]). A cost-of-hire schedule shows the yearly cost paid by the named insured for the vehicles it hires, the rate for insuring these vehicles as hired autos, and whether the hired auto coverage is primary or secondary to other coverage. The schedule thus does not typically name individual vehicles, but provides data from which a court may determine whether a vehicle is covered as a hired auto (Old Republic, supra; see also Jefferson Insurance Co. of New York v Travelers Indemnity Co. 92 NY2d 363,370 [ 1998] [ van insured as hired auto; cost of hire schedule not required to list 25 specific vehicle; schedule provided categories of information allowing determination that the vehicle was covered]). Assessment of the cost-of-hire schedule in DHL's policies is therefore crucial. The policy which National Union issued to DHL does contain a cost-of-hire schedule. It is reprinted below and states: ITEM FO~R SCHEDULE OF HIRED OR BORROWED COVERED AUTO COVERAGE AND PREMIUMS UA811.ITV COVERAQI! • IIATIIIIG-IIASIS, COST OP Hllll! ! BTATe J EllllMATiiD COST OF HIiia RATE·PEll liACH •100 F~CTOR Ill U.'l>lllly ~~MIUM FOR EACH STATE ®ST OF HIRE eo .. _ ... ...._, PER. SCHEDULE ON FILE 1TH COMPANY INCLUDED .. il ' .. ;, ' :- ' TOTAL PREMIUM INCLUDED ' . Collt ol hlto ~ 1he lot.al 11mount you lnci.w fOt' the hlr• or •eutoa• you don't own Cnol lnclUdlng ··-· you borrow or rent 1roi; your par1nors or •employee•• /or lholr family members!. Coat of hire does l10t Include chllrqea for 11orvlcas parf-d by motor cerrlere of properly, Ot' pa+er:igers. 46169 f71(!3' (R 526, 1812). The cost-of-hire schedule from DHL's policy thus refers to another "schedule on file with company," thereby incorporating the "on- file" schedule into the terms of the policy. To date, the "on-file" schedule has not been produced despite plaintiff's requests for it. If the "on-file" cost-of-hire schedule is eventually produced, plaintiff expects that it will: 1. under the "State" column, identify every State in which DHL operates; 26 2. under the "Estimated Cost of Hire For Each State" column, show a correlation, State-by-State, matching DHL's costs for contractor vehicles in each State; 3. under the "Rate per each $100 Cost of Hire" column, show calculations matching the premium calculation worksheets prepared by the underwriters with respect to the contractor vehicles; and 4. under the "Factor (if Liability Coverage is Primary)" column, show that the coverage is secondary to the $1 million of coverage each contractor is required to maintain. If the information in the on-file cost-of-hire schedule is similar to the information listed above, the only conclusion that could be drawn is that the contractor vehicles are insured as hired autos under DHL' s policies. Manifestly, until the on-file cost-of-hire schedule is disclosed, a determination cannot be made - especially on a CPLR 3211 motion- on the question whether the contractor vehicles are insured as hired autos. And, if the schedule is never produced, the strongest adverse inference against the insurer is required, compelling the conclusion that the schedule would have shown the contractor vehicles to be insured. g) DHL 's control over MVP and its vehicles. DHL merged with and took over Airbome's operations in 2003 (R 1975). In April 2004, DHL entered into a new "cartage" agreement with MVP which was more stringent than the Airborne contract (R 1125, 1247). 27 DHL' s agreement describes DHL as an "express transportation company," and describes MVP as a "contractor" and as an "independent contractor" which DHL was hiring to perform services in the areas identified by DHL (R 1125, 1140). Although the cartage agreement labels MVP as an "independent contractor" (R 1129), the duties imposed under the agreement establish that MVP was not independent of DHL. DHL dominated MVP. DHL' s own promotional materials acknowledged that having a dedicated ground fleet was paramount "to obtain the greatest control and to ensure the unmatched level ofDHL care over a shipment's journey" (R 1251-1252 [ emphasis added]). MVP was prohibited from making deliveries for a DHL competitor (R 1129, 1248), and even if MVP wanted to make a delivery for a non-competitor, MVP was required to obtain DHL's written permission first (R 1210-1211). Even if DHL granted permission, MVP would first have to remove all DHL markings from its vehicles (R 1129). In other words, it would have to repaint its vehicle before the delivery could be made. All of this control is set forth under a heading labeling MVP's relationship with DHL as "non-exclusive" (R 1129). DHL may have labeled its relationship with MVP as "non-exclusive," but the substance of the agreement shows the opposite. DHL' s insurers recognized this 28 and labeled MVP's prior relationship with Airborne as "exclusive," even though Airbome's contract had been less restrictive (R 1803). "All of MVP's vehicles were garaged at the DHL facility" (R 1237). MVP's office was inside the DHL facility, and DHL had a key to it (R 1237). DHL owned all of the equipment used to dispatch MVP drivers (R 1238). On a daily basis, DHL representatives sent MVP drivers instructions by text message and the drivers were expected to follow them (R 1239). If a customer had a question or problem, the MVP worker was required to contact DHL (not MVP) for resolution, or supply the customer with DH.L's (not MVP's) telephone number (R 1146, 1222). The cartage agreement mandated that "all MVP vehicles shall bear appropriate DHL marks, including color scheme," and that the "DHL marks shall be maintained to project a professional and business-like image through a program of regular cleaning, painting and damage repair" (R 482, 1229). Dashboards must be kept "neat and orderly," with litter "contained in litter bags or containers" (R 482, 1230). DHL prescribed the makes and models of the vehicles MVP may use (R 483, 1231 ), and if an MVP vehicle had "damages, scratches, dents or peeling paint or decals," MVP was required to repair them within 30 days and provide documentation to DHL that it was done (R 482, 1230). 29 The cartage agreement required that MVP "ensure that each vehicle is driven in such a manner that will provide maximum safety to the driver and the general public" (R 1128, 1210). DHL audited MVP's safe driving practices and regularly engaged an industrial engineer to examine MVP's routes to maximize efficiency and increase DHL's profitability (R 1210, 1241, 1244). MVP was required to equip its vehicles with frequently-requested customer supplies and its compliance was subject to audit (R 1145, 1219-1220). Under the cartage agreement, MVP "shall not, without DHL' s prior written authorization, retain any third parties to perform" its work (R 1126, 1199). DHL had the right to inspect MVP's records, as well as the right to "follow [MVP's] drivers around [to] see if they're" complying with DHL's requirements (R 1130, 1132, 1213-1214). The cartage agreement authorizes "snap" or "unannounced" inspections at any time to "verify [MVP's]" compliance with the cartage agreement (R 1132, 1214-1215). DHL regularly conducted audits and unannounced inspections (R 1215). The agreement imposed security standards on MVP (R 1200-1201) and mandated that if an MVP employee violated them that DHL be notified and the employee terminated (R 1200-1202). The agreement required that MVP employees submit to random drug and alcohol screening on a periodic basis and 30 their termination was required if they failed a test (R 1127, 1205-1206). DHL required that federal, State and local background checks be conducted for MVP's employees, and negative results required termination (R 1127, 1207). The cartage agreement imposed strict "scanning" requirements which had to be followed by MVP (R 1146-1148, 1223). MVP was required to rent scanners from DHL (R 1224), and to pick up airbills "scanned ... at the customer's location" (R 1146). Random scanning audits were frequently performed (R 1146, 1224-1225). The scanning and signature requirements for package deliveries were "very specific" (R 1148, 1227). The cartage agreement also imposed appearance standards for MVP's workers setting forth "very specific requirements" for how MVP' s employees must dress (R 484). They must wear a DHL uniform bearing DHL markings, and must wear them in a "clean, professional and businesslike manner" (R 484, 1232). The uniform must consist of: shirt, trousers, shorts and a uniform belt. ... If a T- shirt is worn under the uniform shirt, it must be white, with no lettering or pictures on the T-shirt. . . . If uniform shorts are worn, plain white socks must be worn with low top black shoes. . . . If a hat is worn, it must be a DBL-issued or approved hat, and ... in cold weather, if additional exterior clothing is worn, it will consist of a DHL issued or approved sweater, vest, jacket or parka. Uniforms must be kept in a clean and professional-looking manner, free of stains, grime, dirt or discoloration. Shirts must be neatly 31 tucked into pants and the uniform kept in a neat and presentable manner. (R 484, 1233-1234). DHL assessed compliance with the uniform requirements on a daily basis (R 1234). DHL also required that MVP workers "refrain from any behavior that would bring embarrassment or disrepute to DHL or otherwise damage DHL' s reputation" (R 484, 1234-1235). Regarding MVP's areas of operation, which were inside DHL 's facility, DHL required that all ofMVP's areas, including sort areas, warehouse areas, offices and drop boxes be maintained to "present a clean, professional and business-like image to DHL's customers" (R 485, 1235). MVP managers were required to attend meetings with DHL once or twice a week, or more frequently if MVP was not meeting performance expectations (R 1239-1242). DHL' s control over MVP and its vehicles was specifically addressed during the Carlson I personal injury/wrongful death trial. Extensive evidence was presented on the issue ofDHL's control over MVP (see R 1191-1254). The itemized verdict sheet from the Carlson I trial specifically asked the jury to determine whether "DHL substantially control[led] the day-to-day operations of MVP" and "substantially controlled the delivery operations of MVP" (R 1178). The jurors answered "Yes" to both questions (R 11 78). 32 h) The decisions below. All of the defendants filed motions under CPLR 3211 seeking dismissal of plaintiffs complaint. Insurers National Union and AAIC both contended that the MVP truck and driver were not covered under the "hired auto" provisions of the insurance policies issued to DHL because the MVP truck had not been "hired" by DHL. AAIC also filed a separate motion in which it, alone, contended that the policy it issued to DHL was not "issued or delivered" in New York and that, as a consequence, plaintiff did not have a basis for bringing suit against it under Insurance Law §3420(a). 1. The hired auto coverage decisions. Considering National Union's and AAIC's motions seeking dismissal on the ground that the MVP vehicle was not covered as a "hired auto" under the insurance policies, the motion court disagreed with the insurers. Concluding that the MVP truck could qualify as a hired auto, the motion court explained: Defendants argue that the commercial van driven by Porter and owned by his employer, MVP, did not constitute a "hired auto" within the meaning of the policies. The Defendants claim that the definition of a "hired auto" under the policies is clear and unambiguous and does not cover any of the vehicles owned by MVP and operated under the Cartage 33 Agreement between DHL and MVP. Significantly, according to the Defendants, the Cartage Agreement provided that MVP was given the sole right to determine all aspects of its performance of its obligations including staffing, operation and routing of vehicles. . . . Defendants cite the case of Dairylea Cooperative, Inc. v Rossal, 64 NY2d 1 (1984). In Dairylea, the Court of Appeals found that the hauling contract between Dairylea and R&H was an independent contractor and that the contract did not specify the use of any particular tanker in the operation of the hauling service and, therefore, did not constitute a hired automobile within the meaning of the policy .... In response, the Plaintiffs assert that the commercial van driven by Porter was a "hired auto" within the meaning of the policies and that it was being driven with the consent of its owner, MVP, at the time of the accident. They cite the jury verdict in the underlying Carlson Action in which DHL was found to be in substantial control of the day to day operations of MVP who was held to be responsible for the negligence of its employee, Porter. Further, the Plaintiffs submitted portions of the deposition testimony of Barry Flynn, an employee of AIG Property Casualty, Inc., with personal knowledge of the facts herein. Mr. Flynn confirmed the validity of a handwritten note found in the underwriting materials wherein such note appears to indicate that exposure of independents driving their own vehicles in hauling goods on behalf of DHL was contemplated in the pricing of the subject policy .... Significantly, the record reflects a substantial amount of supervision and control exerted by DHL over the 34 operations of MVP; including but not limited to, the fact that MVP's office was located inside a DHL facility; all ofMVP's vehicles were garaged in DHL's facility; and DHL's managers provided daily instructions to employees of MVP. The Court notes that in reviewing the Court of Appeals decision in Dairylea, an important factor there concerned the transfer by Dairylea of the use and ownership of the vehicle in issue to R&H, in that, it was no longer able to exert any control over the use and operation of the tanker. In contrast, the jury determined in the underlying Carlson Action that DHL had substantially controlled the day to day operations and delivery operations of MVP. * * * [T]he Court finds that [on this CPLR 3211 motion] the [complaint] is sufficient to allege that the MVP vehicle constituted a "hired auto" within the meaning of the Defendants' policies and that such vehicle was being operated with the "permission" of DHL. (R 360-362). Defendants appealed to the Appellate Division, which only had before it the limited Record from the CPLR 3211 motions to dismiss. The motion court had directed discovery to continue while the appeal was pending (R 3 63 ), but the additionally-discovered evidence was not part of the Record on the appeal to the Fourth Department. Based upon the Record presented to it, the Appellate Division reversed the motion court's order and dismissed all of plaintiffs 35 claims. 1 The Fourth Department concluded as a matter of law that the MVP trucks were not insured as hired autos under DHL' s insurance policies. The Appellate Division's decision states: We agree with defendants that in order for the MVP vehicle driven by Porter to be deemed a vehicle "hired" by DHL, there must be a showing that DHL exercised control over the vehicle, and not general control over MVP (see 8A Couch on Insurance§§ 118:48, 118:49 [3d ed 2014]). "Generally, a vehicle owned by an independent contractor who contracts with the insured to perform services for the insured is not a hired automobile ... [T]he contract between the insured and the independent contractor in those situations is generally for the services of the subcontractor, not the vehicle used in providing the services" (id., § 118:52 [ emphasis added] ). In Dairylea Coop. v Rossal ( 64 NY2d 1, 7), an independent contractor was hired to transport milk. The Court held that the tanker truck was not a hired automobile where "the tank farm milk hauling contract ... called for transportation of milk by ... an independent contractor rather than use of a particular tanker in the rendition of such service" (id. at 10-11; see Federal Ins. Co. v Ryder Truck Rental, 189 1 After the appeals were argued at the Appellate Division, but before it decided them, a deposition of AIG Senior Vice President Robert Osborne was conducted. Plaintiff viewed Osborne's testimony as affecting the merits of the action and brought a motion at the Fourth Department seeking permission to file a post-argument submission so that the court could consider this new development (compare Court of Appeals Rule 500.6 ["Counsel shall timely inform the (Court and Counsel) ... of all developments affecting appeals]). The Appellate Division decided the appeals on the merits and dismissed as moot the motion to file a post- argument submission. This Court may take judicial notice of the motion filed at the Appellate Division (Sam and Mary Housing Corp. v Jo/Sal Market Corp., 100 AD2d 901,903, affd 64 NY2d 1107; see also Long v State of New York, 7 NY3d 269,275). 36 (R 9-10). AD2d 582, 584, affd 82 NY2d 909, rearg denied 83 NY2d 830; see also US Fid & Guar. Co. v Heritage Mut. Ins. Co., 230 F3d 331, 334-335; Toops v Gulf Coast Mar., Inc., 72 F3d 483, 487-488; Chicago Ins. Co. v Farm Bur. Mut. Ins. Co. of Arkansas, Inc., 929 F2d 372, 373-374; American Cas. Co. of Reading, Pa. v Denmark Foods, 224 F2d 461,463). General supervision is not enough (see US Fid. & Guar. Co., 230 F3d at 335). There is a "distinction between hiring a company that provides transportation and hiring a truck" (Toops, 72 F3d at 487). We conclude that the cartage agreement does not show that DHL had sufficient control over the MVP vehicle in order for it to be deemed a "hired" automobile. Rather, it showed that DHL hired MVP as an independent contractor to provide delivery services. It provided that MVP "shall have the sole right to determine all aspects of its performance of its obligations under this Agreement, including the staffing, operation, and routing of the [MVP] Vehicles in the Service Areas." MVP was responsible for registering, insuring, fueling, and bearing all other costs and fees relating to the vehicles. The fact that DHL required the MVP vehicles to have a certain appearance does not, in our view, show the requisite control over the vehicle within the meaning of a "hired" automobile. "The [vehicle] was not hired by [DHL] and was not being used at the time of the accident by an employee of [DHL] in its business or in its behalf, but was being used by an employee of [MVP] under an independent contract" (American Cas. Co. of Reading, Pa., 224 F2d at 463). Moreover, inasmuch as DHL did not have control over the MVP vehicle, "it cannot be said in any realistic sense that ... [DHL] could grant [MVP] permission to use it" (Dairylea Coop, 64 NY2d at 10). 37 2. The Insurance Law §3420 "issued or delivered" decisions. As noted above, defendant AAIC filed a separate motion based upon its interpretation of Insurance Law §3420(a). Section 3420 mandates that insurance polices contain provisions allowing for direct suit against an insurer for the amount of a judgment against its insured if the policy was "issued or delivered" in New York. AAIC contended that it was not subject to suit under Section 3420 because DHL's policy was not issued from an AAIC office located in New York, and because New York was not DHL's principal place of business. The motion court denied AAIC's Insurance Law §3420 motion in a separate order from the one addressing the hired auto coverage question. The court found that the AAIC policy had been delivered in New York. AAIC took a separate appeal to the Appellate Division from the order denying its Section 3420 motion. That appeal was argued and decided on the same days as the appeal addressing the hired auto coverage question. The Appellate Division's decision on the hired-auto coverage appeal referred to and incorporated its decision from the Section 3420 appeal, although separate orders were issued for the two appeals. Again disagreeing with the motion court, the Appellate Division held that the AAIC policy had not been issued or delivered in New York, and that AAIC was not subject to suit in New York under Insurance Law §3420. 38 * * * Plaintiff first moved the Appellate Division seeking leave to appeal to this Court from both Appellate Division_orders. After leave was denied by the Appellate Division, plaintiff requested leave to appeal from this Court, which was granted. Both Appellate Division orders should now be reversed. 39 ARGUMENT I. THE MOTION TO DISMISS SHOULD HAVE BEEN DENIED BECAUSE (1) THE INSURERS DELIBERATELY INSURED THE CONTRACTOR VEHICLES AS HIRED AUTOS, (2) THE INSURERS FAILED TO DISCLOSE THE COST-OF-HIRE SCHEDULE, AND (3) DAIRYLEA 'S HOLDING SHOULD BE CONFINED TO ITS NARROW FACTS. a) Plaintiff's claim su-rvives a pleading-stage motion to dismiss. The issues presented by this case arise from defendants' motions to dismiss plaintiffs complaint under CPLR 321 l(a)(l) and (7). On such a motion, the Court "must give the pleadings a liberal construction, accept the allegations as true and accord the plaintiffs every possible favorable inference" (Chanko v American Broadcasting Companies, Inc.,_ NY3d _, slip op p 4, dee March 31, 2016 [2016 WL 1247664]; accord 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152). The Court determines "only whether the facts as alleged fit within any cognizable legal theory" (Sokoloff v Harriman Estates Development Corp., 96 NY2d 409, 414 [2001]). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). If a plaintiff "demonstrates that facts may exist" to support denial of the motion, the motion should be denied and discovery granted (Amigo Foods Corp. 40 v Marine Midland Bank-New York, 39 NY2d 391,395 [1976]). "A dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]). Where an insurer seeks dismissal by way of a CPLR 3211 motion, it must submit with its motion "all of the transaction documents" pertinent to the challenged claim and if it fails to do so its motion must be denied (Granite State Insurance Co. v Transatlantic Reinsurance Co., 132 AD3d 479, 481 [1st Dept 2015]). Where "it cannot be said that the documentary evidence submitted [by the insurer] conclusively establishe[d] a defense to the asserted claims as a matter of law," the insurer's motion to dismiss must be denied (Spoleta Construction, LLC v Aspen Insurance UK Limited, _ NY3d _, slip op March 24, 2016 [2016 WL 1136297]) In the case at hand defendants have not produced "all of the transaction documents" relevant to plaintiffs claim. Only limited discovery was obtained before defendants moved for dismissal. All of the discovery obtained to date shows that hired auto coverage for the contractor vehicles was intended and paid for. Moreover, a crucial cost-of-hire schedule has not been produced by the insurers. It is incorporated into and is part of the insurance policy. It would 41 show if contractor vehicles, including MVP's, were insured as hired autos. Without its disclosure, the insurers have not met their obligation to disclose all necessary transaction documents, and it was error to grant their motions to dismiss. b) The overwhelming evidence of the intent to insure the contractor vehicles as hired autos. The documents defendants did produce during the abbreviated discovery period prior to their motions to dismiss establish that the insurers and DHL intended that contractor vehicles, like and including MVP' s, be insured under DHL' s policies. The insurers charged premiums for that coverage, and DHL paid the insurers to obtain it. The Appellate Division's holding in this case erases the coverage which the insurers were paid to provide, not only for the vehicle involved in the Carlson accident, but for all 7,717 contractor vehicles hired by DHL nationwide. These vehicles were required by federal law to have $5 million of coverage because they transported hazardous materials, but as a result of the Appellate Division's decision in this case, none of them were covered. The Appellate Division's decision is entirely silent on the intent ofDHL and the insurers that the MVP and contractor vehicles be covered as "hired 42 autos." The overwhelming evidence of the intent to provide coverage for the contractor vehicles cannot be ignored. The intent of the parties to the insurance contract is paramount. The "policy must be given a practical construction, not thereby with the result that there is a revision of the policy or an increase of the risk and thus an extension of the resulting liability, but for the purpose of determining what the parties must reasonably have intended by its terms when the policy was written" (McGrail v Equitable Life Assurance Society, 292 NY 419, 424-425 [1944]). "[A]n insurance policy sets forth the contractual obligations of the parties and under basic contract law the intent of the parties at the time of entering the contract should be closely examined" (Scinta v Kazmierczak, 59 AD2d 313, 316 [ 4th Dept 1977]; Matza v Empire State Mut. Life Ins. Co., 50 AD2d 554, 555 [1st Dept 1975]). Old Republic Insurance Co. v Stratford Insurance Co. (777 F3d 74, 83 [1st Cir 2015], certified question on unrelated issue addressed at_ A3d _, 2016 WL 302212 [NH Supreme]) specifically addressed the importance of the parties' intent when determining whether hired auto coverage exists. Old Republic explained: where the intent of the contracting parties can be conclusively resolved by objective extrinsic evidence, . 43 (Id. at 83). .. we will not ignore that evidence in favor of dogmatic adherence to insurance maxims. The Couch Insurance Law Treatise similarly explains: The intent and understanding of the parties to an insurance contract is far more important than the strict and literal sense of the words used in the contract; thus, it is equally important to consider the subject matter of the insurance and the subject or object which the parties had in view at that time. Additionally, it is often considered proper to consider the business of the parties, the circumstances surrounding the making of the contract, the situation of the property, and all other conditions which have a legitimate bearing on the parties' intention .... The most effective way to establish the intent and understanding of the parties is to consider the negotiation process that culminated in the policy. Proper documentation is essential to this goal. ... (2 Couch on Insurance§ 22.8 [3d ed] [emphasis added]; see also Mt. McKinley Insurance Co. v Coming Incorporated, 96 AD3d 451,453 [1st Dept 2012][discovery of underwriting file allowed to determine "intended meaning of the relevant policy language"] ). Consideration of the negotiation process that culminated in the policies issued to DHL in this case leads to the undeniable conclusion that the insurers and DHL intended that the contractor vehicles, including MVP's, be covered as "hired autos" under DHL' s policies. This is demonstrated by the email and 44 memoranda exchanges among the National Union underwriters discussing coverage for the contractor vehicles, by the handwritten notes of underwriter Barry Flynn, and by the charging and payment of premiums. Indeed, all of the underwriting evidence shows an intent to insure the contactor vehicles as "hired autos." In holding that no coverage existed, the Appellate Division employed a judicial eraser to obliterate coverage intended and paid for. The email and document exchanges among the underwriters are summarized at pages 16-19 of this brief. They show careful deliberation by the underwriters on the question of coverage for the contractor vehicles and, as the unrebutted underwriting affidavit from plaintiffs expert explains, DHL could only insure the contractor vehicles under the Symbol 8 hired auto provisions of its policies (R 1952-1953, 1957; see also Attachment A to this brief). Underwriters received and reviewed a sample of the cartage agreement DHL used to hire its contractors (R 1955, 1991, 2006). Therein, DHL provided 57 pages of detail showing how DHL controlled the contractor vehicles and the contractors' day-to-day and delivery operations (R 430-487). There was no need to review the cartage agreement for the contractor vehicles unless coverage was being provided for those vehicles. Similarly, the underwriters counted the vehicles, finding that 7,282 were owned by DHL and that 7,717 (more than half) were owned by the contractors (R 2001). There was no reason for the 45 underwriters to count the contractor vehicles if the insurers were not insuring them. And expressly addressing the question at hand, the underwriter emails and notes explicitly state that coverage for the "hired fleet" was "attaching." Samples of the underwriter emails acknowledging that the contractor vehicles were being covered include the following: The submission states that there are 15,000 vehicles with 7,283 owned, which leaves 7,717 for non-owned . . . . With the required limits of only $IM for the independent contractor vehicles, we should consider putting a retained amounts endorsement. Please confirm that the u/1 policy provides $2M CSL for these vehicles (R 2001 [ emphasis added]). Can confirm the primary picks up NO [ non-owned] and Hired fleet, they are also required to carry $1ml per this contract, [ with umbrella] attaching at $3ml (R 2001 [ emphasis added]). The two emails quoted above expressly show that the contractor vehicles had $1 million of their own coverage ( which is correct), and that the "Hired fleet" of contractor vehicles was receiving an addition $2 million of coverage under DHL's $3 million primary policy. This is the only interpretation that can be given to these emails. Further confirmation is provided by the following email: 46 Attachment/Pricing - confirmed ... that we are contemplating the Hired/Non Owned aspect of the auto .... Non Owned auto - ... fleet is 75% econoline vans, 25% medium trucks. (R 1991). Again, the email shows that there was coverage for the "Hired" fleet, and that the premiums for insuring the fleet were calculated based upon "attachment pricing." AIG Senior Vice President Robert Osborne required that "hired auto" coverage be written into DHL' s policy (R 1979), and a handwritten note of underwriter Barry Flynn recognized that contractors like MVP were to be covered under DHL's policy (R 1616-1617). Flynn's note states: we have included the non-owned exposure of independents driving their own vehicle. In addition all independents are required to carry $1 million in limits which would increase the umbrella attachment point for such vehicle (R 2008 [ emphasis added]). Flynn's note expressly acknowledges that because the independents had their own insurance coverage in the amount of $1 million, coverage for their vehicles under DHL' s policies "attached" for liability in excess of $1 million. This is confirmed by another handwritten note by Flynn. This note appears on a premium calculation worksheet for the "independently operated vehicles," and shows a "lM[illion] Attachment Work Up" (R 2013). 47 The crucial point emerging from all of the emails, notes and worksheets is that there was an "attachment point" at which the DHL policy provided coverage for the "Hired Fleet." By necessity, the existence of an "attachment point" at which the contractor vehicles would be covered means that the contractor vehicles had coverage under DHL 's policies. It could only be hired auto coverage (R 1952-1953; see also Attachment A to this brief). The underwriting materials also show that DHL paid premiums to provide hired auto coverage for the 7,717 contractor vehicles at a cost of $432,000 for just the umbrella policy alone (R 1959, 2016). The payment and acceptance of premiums, after scrutiny by the underwriters of the risk to be insured, is compelling proof of coverage. "Care must be taken to give the various clauses of the policy an interpretation consistent with the main purpose of the contract, which is to guarantee to the insurer the payment of its premiums, ... and to give the insured the security and the returns for which [it] ... pays" (2 Couch on Insurance§ 22:46). Where an insurer has "reasonably defined[ d] the 'universe of possibilities to which it can apply its risk analysis methods ... and determine[ d] a premium [ which is paid] . . . , then it is likely that the conduct would be insured by a policy that contemplated the risk" because it is "a bargained-for risk" (Maroney v New York Central Mutual Fire Ins. Co., 5 NY3d 467,472 [2005]). 48 The intent of the insurers and DHL that the contractor vehicles be covered under the hired auto provisions of DHL' s policies was confirmed by plaintiffs expert. Her opinions are highly instructive because, when assessing the intention of the parties to an insurance contract, "[ c ]ustom or usage is presumed to enter into the intention" (London Assur. Corp. v Thompson, 170 NY 94, 99 [ 1902 ]), and "it may be necessary to use expert testimony to assist the court in interpreting the custom and usage of a particular trade" (2 Couch on Insurance §22:53; see Sincoff v Liberty Mutual Fire Insurance Co., 11 NY2d 386, 388-390 [1962] [ expert opinions considered regarding insurance policy definition of "vermin"]). On the question of custom and usage, plaintiffs expert explained that "it is understood in the insurance industry" that the type of cartage agreement existing between DHL and its contractors, such as MVP, rendered the contractor vehicles "hired autos" which would be insured under the "hired auto" provisions ofDHL's business automobile policies (R 1953-1954, 1956). That is why the insurers consciously counted the 7,717 contractor vehicles, studied the cartage agreement, and calculated premiums for covering the contractor vehicles (R 1947-1970). 49 The affidavit of plaintiffs expert is the only evidence available for assessing custom and usage in this case. The insurers offered no evidence on the issue. Nor can custom and usage be gleaned from the case law cited in the Appellate Division's decision. In every case it cited, there was a clear separation between the manufacturer or producer which asked an independent hauler to transport its product. The manufacturer/producer and the hauler were in separate and discrete businesses. This case is fundamentally different. MVP performs DHL's job. Moreover, "the reasonable expectation and purpose of the ordinary business [person] when making an ordinary business contract will be considered in construing [ an insurance] contract" (BP Air Conditioning Corp. v One Beacon Insurance Group, 8 NY3d 708, 715 [2007] [emphasis added]; accord General Motors Acceptance Corp. v Nationwide Insurance Co., 4 NY3d 451, 457 [2005]; Album Realty Corp. v American Home Assurance Co., 80 NY2d 1008, 1010 [1992]). Did DHL have a purpose for insuring the contractor vehicles as hired autos? It did. First, the cartage agreement between DHL and MVP expressly states that MVP "shall provide pickup, transport, and delivery of shipments ... including materials defined as hazardous materials under regulation of the US. 50 Department of Transportation" (R 446, 457, 468 [emphasis added]; see also R 435 [requiring that MVP comply with legal requirements for delivery of hazardous materials]). MVP's trucks operated within a 300 mile radius of Buffalo, New York, which encompasses the States of New York, Pennsylvania, Ohio and West Virginia (R 2001 ). MVP thus needed to comply with federal mandates for insurance coverage as an interstate shipper of hazardous material. The applicable regulation, 49 CFR 387.9, mandated that liability coverage be in the amount of no less than $5 million. DHL and its insurers knew that, under DHL' s cartage agreements with its contractors, the contractors would only be maintaining $1 million of coverage (R 439, 2001, 2008). In order for the contractor vehicles to have the required $5 million of coverage, it was necessary for DHL to provide the additional amount. Second, having DHL rather than the contractors provide the insurance allowed DHL to save money. As noted, under the cartage agreements, DHL only required the contractors to purchase $1 million of coverage (R 439). If contractors each purchased policies in the total required amount of $5 million, the cost to the contractors would have been much higher, and this cost would have been passed on to DHL. However, as plaintiffs expert explained, DHL was able to insure the contractors collectively at a lower premium cost through 51 hired auto coverage, especially because DHL was able to provide the coverage under a "fronted insurance arrangement" (R 1950). Would a reasonable business person in DHL' s position expect that DHL would have coverage for the contractor vehicles? Yes. DHL had a business reason to cover the contractor vehicles and paid premiums to do so. The underwriting expert explained that the only way to insure them under DHL's policies was as hired autos (R 1952-1953, 1957). Defendants have never, at any time during this litigation, presented expert evidence in support of their position. Nor did they present an affidavit from AIG Vice President Robert Osborne explaining what he meant when he insisted, during the underwriting process, that DHL' s "coverage [was] to include comprehensive auto liability, non-owned and hired" (R 1952, 1979). Defendants have not overcome the overwhelming underwriting, expert and other evidence, all of which establishes that the insurers consciously and deliberately, after careful analysis, determined how to insure the contractor vehicles, what it should cost, and charged and collected premiums for the coverage. 52 c) The underwriter's admission, the payment of premiums and the failure to produce the cost-of-hire schedule. The insurers are asking this Court to shield its eyes from the overwhelming evidence showing that the contractor vehicles were intended to be covered as hired autos. The insurers argue that the policy terms "a covered 'auto' you own, hire or borrow" are clear and unambiguous and could not, as a matter of law, possibly provide coverage for the contractor vehicles which DHL hired under the cartage agreements. The insurers argue that the underwriting documents showing the intent to insure the contractor vehicles constitute extrinsic evidence, outside the terms of the policy, which should not be considered in the absence of an ambiguity. As discussed iefra, the terms "hired auto" are ambiguous. But it must be emphasized at the outset that, regardless of an ambiguity, significant proof of hired auto coverage exists which is not extrinsic evidence. Admissions by an underwriter are not extrinsic evidence (Nationwide v Erie and Niagara Insurance Association, 249 AD2d 898, 899 [4th Dept 1998]; citing Richardson on Evidence §§11-401-11-405 [Farrell 11th ed]). In this case underwriter Barry Flynn admitted at a deposition that his handwritten note indicated: 53 we have included the non-owned exposure of independents driving their own vehicle. In addition all independents are required to carry $1 million in limits which would increase the umbrella attachment point for such vehicle. (R 2008, 2018). Likewise, payment of premiums is evidence of coverage, and not extrinsic evidence, and is properly considered regardless of a policy ambiguity. This point was addressed in Manchester v Conrad (90 So3d 554 [La Ct App 1st Cir] [table], reported at 2012 WL 602185, [authorized for citation by La Code Civ Pro §2168], writ denied 88 So3d 471-473 [La Supreme 2012]), where hired auto coverage was also disputed. Manchester explained: We further note that our consideration of the premium payment is not reliance on impermissible parol evidence, as urged by [ the insurers]. Parol evidence may not be admitted to negate or vary the contents of the policy .... In the instant matter, the premiums collected by National, under the terms of the hired auto endorsement, are not being introduced to negate or vary the terms of the policy. Rather, the premiums paid to National are relevant as a fact in the case, considered for the purpose of determining whether the Circle J tractor-trailer was a hired auto under the clear and explicit policy language. In the present case it is undisputed that DHL paid premiums to insure the contractor vehicles, and such coverage could only be provided under the hired auto provisions of its insurance policies. 54 Moreover, DHL's primary policy includes a cost-of-hire schedule (see cost-of-hire schedule printed at p 26 of this brief). This schedule appears "within the four comers of the policy and cannot be ignored" (Old Republic Insurance Co. v Stratford Insurance Co., 777 F3d 74, 81, supra). It is not extrinsic evidence; it is part of the policy. The cost-of-hire schedule in DHL's policy incorporates by reference the schedule kept "on file" with the Company (R 526, 1812), and defendants have not disclosed the on-file schedule. "A dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon, 84 NY2d at 88, supra). Without production of the on-file schedule, the insurers have not conclusively established their defense. Far from it. d) "Hired auto" is undefined and ambiguous. Construing hired auto policy terms in Jefferson Insurance Co. of New York v Travelers Indemnity Co. (92 NY2d 363, 370, supra), this Court stated: "where some ambiguity is present regarding the extent of coverage or any possible exclusion, the insurer must timely disclaim ( emphasis added)." Jefferson proceeded to find the disclaimer untimely, thereby indicating that the Court had found the hired auto clause to be ambiguous. 55 So too, the hired auto clause in DHL's insurance policies is ambiguous. DHL's policies do not define the terms "hire," "borrow" or "hired auto." An ambiguity is thus properly found (see Dean v Tower Insurance Company of New York, 19 NY3d 704, 709 [2012]["the term 'residence' is not defined in the (insurance) contract making the term 'residence premises' ambiguous"]). Kresse v Home Insurance Company (765 F2d 753, 755 [8th Cir 1985]) applied this approach. Kresse, like this case, involved interpretation of the hired-auto provisions of a business automobile policy. Kresse held that because the insurer chose "not to define the term 'hire' or "hired auto" within its policy, . . . we conclude that the term 'hired auto' is ambiguous" (accord Canal Insurance Co. v Great West Casualty Co., US Dist Ct, Minn, reported at 2013 WL 5275789). To succeed in their argument that the terms "hired auto" are so clear that the true intent of the parties can be ignored, the insurers must overcome "the hombook rule that policies of insurance, drawn as they ordinarily are by the insurer, are to be liberally construed in favor of the insured" (Miller v Continental Ins. Co., 40 NY2d 675, 678 [1976]). Unless the insurers convince this Court that their "construction was the only one that fairly could be placed on the policy," the policy terms must be found ambiguous and the true intent of the 56 parties considered (Sincoffv Liberty Mutual Fire Insurance Co., 11 NY2d 386, 390). If the insurance policy language is "susceptible of two reasonable interpretations, the parties may submit extrinsic evidence as an aid in construction" (State ofNew York v Home Indemnity Co., 66 NY2d 669,671 [1985]). On the question whether the terms "hired auto" are "susceptible of two reasonable interpretations" (id.) it is significant that, for decades, courts throughout the country have divided in their interpretations. And while disagreement among courts is not conclusive on the question whether this Court should find that the policy terms are ambiguous ( compare majority and dissenting opinions in Breed v Insurance Co. of North America, 46 NY2d 351 at 355-356, and 357 [1978]), it is worthy of serious consideration because this case presents facts not considered in the previously-decided ones. The cases showing judicial disagreement over when "hired auto" coverage should be found all involved a common factual scenario not presented here. In the prior cases, a manufacturer or producer placed its product into the hands of a delivery company for delivery of its product. There was a clear separation between the manufacturer/producer and the deliverer. The greater the separation, the easier it was to say that the delivery company should not be 57 insured under the manufacturer's or producer's policy. Even so, courts divided on the question. In contrast, the businesses ofDHL and its contractors were interwoven to a degree not seen in any of the prior decisions. Both parties in this case are in the delivery business. DHL hired MVP to make the deliveries which DHL's customers were asking DHL to make. In the process, DHL stringently controlled MVP and its trucks, providing it with every reason for having MVP insured under its policies. Indeed, federal law coverage mandates required it. As this Court recognized in Continental Casualty Co. v Rapid-American Corp. (80 NY2d 640, 652 [1993]), insurance policy "[c]lauses can, of course, be ambiguous in one context and not another" (accord Michaels v City of Buffalo, 85 NY2d 754, 757 [1995][policy term is to be construed in relation "to the factual context in which it is used"]). Accordingly, "[a]n insurance policy is not to be interpreted in a vacuum; it is issued under given factual circumstances. What at first blush might appear unambiguous in the insurance contract might not be such in the particular factual setting in which the contract was issued" (Sonoco Buildings, Inc. v American Home Assurance Co., 877 F2d 1350, 1353 [7th Cir 1989]; quoting Glidden v Farmers Auto. Ins. Ass'n., 57 Ill2d 330, 336 [Illinois Supreme 1974]). Given the unique factual scenario presented in the context of this case, at the very least the terms "hired auto" are ambiguous here. 58 e) The patent ambiguity resulting from National Union's failure to produce the cost-of-hire schedule. The primary insurance policy issued to DHL by National Union contains, on its face, a cost-of-hire schedule (R 526, 1812, reprinted at p 26 of this brief). Among the columns on this schedule is one for "Estimated cost of hire for each State." This column correlates to the information the underwriters were exchanging in connection with DHL's policies (see R 1982 [underwriter faxing the "State breakdown"]). The cost-of-hire schedule in the National Union Policy states that the information required to be listed in the schedule is "Per Schedule On File with Company." At a minimum, the express reference in the insurance policy to the on-file cost-of-hire schedule, and the insurers' failure to produce it, renders the policy ambiguous on the question of which vehicles were insured as hired autos. Other courts addressing the question whether a vehicle was insured as a hired auto have focused on whether the vehicle fell within the category of vehicles appearing in the policy's cost-of-hire schedule. This approach was recently employed by the First Circuit Court of Appeals in Old Republic v Stratford Insurance Co. (777 F3d 74 [l st Cir 2015], supra), which emphasized: We find the estimated cost of hire for "hired autos," listed in the ... Policy to be particularly instructive as 59 to the parties' intent. ... [C]ontract interpretation rules require consideration of the cost estimate within the four corners of the policy as indicative of the intent as to what was being covered. Old Republic "[c]onsider[ed] the entirety of the [insurance] Policy, including the pricing estimate, background, and circumstances, as informed by the lease agreement between" the parties (id at 82). Rather than reading the terms "hired auto" in isolation, Old Republic read the terms in context of objective evidence of intent, including the cost-of-hire schedule in the policy, which identified the classes of vehicles which would be covered as hired autos (id. at 81). A similar approach is seen in Manchester v Conrad (2012 WL 602185, supra). Manchester referred to both the cost-of-hire schedule, and the fact that premiums were paid to obtain hired auto coverage for contractor delivery trucks, when determining that the contractor vehicles were covered as hired autos. This Court has itself analyzed a cost-of-hire schedule for purposes of determining whether hired-auto coverage existed ( see Jefferson Insurance Co. ofNew York v Travelers Indemnity Co. 92 NY2d 363,370 supra [finding vehicle was a hired auto]). As Old Republic, Manchester and Jefferson Insurance show, consideration of the cost-of-hire schedule is imperative for assessing whether a 60 vehicle is insured as a hired auto. In this case, no one from National Union with knowledge of the facts has explained why the cost-of-hire schedule cannot be located and disclosed when the express terms of the policy refer to it. There is every reason to believe that the undisclosed cost-of-hire schedule prepared for the Nation Union policy will demonstrate that the contractor vehicles, including MVP's, were covered as hired autos. Moreover, if the insurers cannot produce the cost-of-hire schedule, "the strongest inferences may be drawn against them" for their failure to produce the document (Noce v Kaufman, 2 NY2d 347, 353 [1957]; see also, PJI 1 :77). f) The Appellate Division erroneously relied upon Dairylea and other inapposite decisions. "Although the 'hired auto' clause is a standard provision in business automobile liability policies, there are surprisingly few reported New York cases that deal with the issue of when a vehicle is considered a 'hired auto' so as to trigger insurance coverage" (Valley Forge Insurance Co. v Allstate Indemnity Co., NY Sup Ct, Kings Co. 2014, reported at 2014 WL 3689650). However, this Court did find that hired auto coverage existed in Jefferson Insurance Company ofNew York v Travelers Indemnity Company (92 NY2d 363,370). 61 In the case at hand: (1) there is overwhelming evidence that hired auto coverage for the contractor vehicles was intended and paid for, and (2) the cost- of-hire schedule which would indicate whether the contractor vehicles were covered has not been produced by the insurers. Nevertheless, the Appellate Division held, as a matter of law on a CPLR 3211 motion, that MVP's vehicles were not covered as hired autos under DHL's policies. In reaching its conclusion the Appellate Division found this Court's decision in Dairylea Cooperative, Inc. v Rossal (64 NY2d 1 [1984]) to be controlling. It is not. The insurance coverage question was not even the principal issue in Dairylea. Instead, Dairylea's focus was whether ownership of the single milk tanker truck involved in an accident had transferred upon a sale before the accident occurred. Dairy lea's entire discussion of the "hired auto" question was as follows: Furthermore, although the policy definition of "insured" included in addition to Dairylea "any other person while using an owned automobile or a hired automobile with the permission of the named insured," the tanker, by reason of the sale and security agreement, was not an owned automobile, nor did the tank farm milk hauling contract, which called for transportation of milk by R & Has an independent contractor rather than use of a particular tanker in the rendition of such service, constitute the tanker a hired automobile within the meaning of that provision. Moreover, it cannot be said in any realistic sense that once the September 1, 1978 agreements and note were 62 executed, Dairylea had any control over use of the tanker or could grant R & H permission to use it (Mason v Allstate Ins. Co. [12 AD2d 138, 144]; see Fidelity & Cas. Co. v Cosmopolitan Mut. Ins. Co., 33 NY2d 966,967). As the owner of the tanker, R & H had the right to use it without permission from Dairylea or anyone else. (64 NY2d at 9-10).2 The conclusions reached by the Fourth Department in the instant case cannot be extrapolated from Dairylea. Dairylea addressed four factors when concluding that the milk-hauling tanker was not hired by the milk producer: 1. The milk hauler was an independent contractor; 2. The milk producer had not hired a particular tanker; 3. The milk producer did not control the milk hauler; and 4. Because the milk producer did not control the hauler, the producer could not give the hauler permission to use its tanker. The Appellate Division referred to all four Dairylea factors in its decision in this case (R 10). However, proper consideration of the factors shows that the opposite conclusion is required here. 1. Independence. The Appellate Division erroneously described MVP as an independent contractor (R 10). The cartage agreement between DHL and MVP 2 Examination of the Court of Appeals briefs from Dairylea shows that only the appellant's brief contained a reference to the hired auto provisions of the insurance policy. That reference was tangential at most and did not suggest the rationale ultimately adopted by this Court (see Dairylea appellant's brief [Lumbermen's], pp 12-14). 63 -which DHL prepared- does label MVP as an independent contractor. However, DHL's self-serving labels in the cartage agreement do not alter the reality imposed by other language in the agreement by which DHL dominated MVP. MVP was DHL's contractor, but it was not independent ofDHL. The Carlson I jury expressly found this (R 1178). Courts have correctly disavowed independent contractor language when construing Federal Express contracts which are similar to DHL's (see Craig v FedEx Ground Package System, Inc., 335 P3d 66, 92 [Kansas Supreme 2014] ["FedEx's control and micromanaging" over its workers proved that an independent contractor relationship did not exist]; accord Alexander v FedEx Ground Package System, Inc., 765 F3d 981 [9th Cir 2014]). At a minimum, the question of MVP' s independence presents issues of fact which cannot be decided on a CPLR 3211 motion (compare Matter of Rivera v Commissioner of Labor, 69 NY2d 679, 682 [1986] ["whether the relationships of the operators- deliverers with the delivery companies is that of employees or independent contractors involves a question of fact"]; accord Matter of Field Delivery Serv. [Roberts], 66 NY2d 516,521 [1985]). 2. A Particular Truck. The Appellate Division focused on the statement in Dairylea that the hiring party had not required "use of a particular tanker" (R 10). The Appellate Division observed that "there is a 'distinction 64 between hiring a company that provides transportation and hiring a truck"' (App Div decision at R 10; quoting Toops v Gulf Coast Mr. Inc., 72 F3d 483, 487 [5th Cir 1996]). This distinction between hiring transportation and hiring a truck applied in Dairylea, where the milk producer had not hired any of the delivery company's trucks. It simply paid for a delivery service. Here, DHL did not have to hire a particular truck because it hired all ofMVP's trucks. It hired MVP's fleet, which the insurance underwriters expressly recognized when calculating the premiums for the hired-auto coverage (R 2001 ). While a label in the cartage agreement stated that MVP's relationship with DHL was non- exclusive, the actual words of the cartage agreement proved the opposite. MVP was precluded from working for anyone else. The insurers themselves labeled MVP's relationship with Airborne (now DHL) as "exclusive" (R 1803). All of MVP's trucks were thus committed to DHL. A particular truck did not have to be hired because they all were ( see Kresse v Home Insurance Company, 7 65 F2d 753, 755 supra [contract did not expressly provide for hiring a specific truck, but questions of fact existed whether truck was insured as a hired auto]). 3. Control. Questions of control present issues of fact ( see Gronski v County of Monroe, 18 NY3d 374, 381-382 [2011]). Nevertheless, the Appellate Division concluded, as a matter of law, "that the cartage agreement does not show that DHL had sufficient control over the MVP vehicle" (R 10). 65 The Appellate Division substituted its finding of lack of control for the findings of the insurance underwriters. The underwriters had determined that DHL did sufficiently control MVP's vehicles when underwriting coverage for them under DHL's policies. The Appellate Division also substituted its finding for the finding of the Carlson I jury, which expressly determined, after extensive trial proof, that DHL had controlled MVP's day-to-day and delivery operations (R 1191-1254, 1178). It was error for the Appellate Division to substitute its findings - which were findings of fact - for those of the underwriters and Carlson I jury, and to do so as a matter of law on a CPLR 3211 motion. The Appellate Division's findings were also in disregard of the unrebutted affidavit of the insurance underwriting expert who explained: "It is understood in the insurance industry" that fleets of vehicles controlled under a cartage agreement "become hired autos which are covered under the hiring company's insurance policy if it provides for hired auto coverage" (R 1956). 4. Permission. The Appellate Division stated that because DHL did not control the MVP van, it could not grant permission for the MVP driver to use it. The finding of lack of permission was erroneously based upon a finding of lack of control. Point II of this brief explains, in detail, why the MVP driver was driving the van with DHL's permission at the time of the accident. 66 Rather than deciding this case by trying to fit the facts into category boxes - using an "independent contractor" label, a "single tanker" rule or summarily concluding control was absent - the totality of the circumstances should be considered. Deference should also be given to the determinations reflected in the underwriting documents, because the underwriters were in the best position to assess whether the nexus between DHL and MVP was close enough that hired auto coverage could be written through DHL's policies to cover the contractor vehicles. Respectfully, courts should not second guess the insurer's judgment on the question of what it can insure after the insurer has accepted payment for the coverage. To erase the coverage after the insurer is presented with a claim affords the insurer an unfathomable windfall. Dairylea presents no impediment to coverage in this case. The underwriters in Dairylea never considered covering the milk hauler's tanker as a hired auto under the milk producer's policy. In Dairylea, there was a clear separation between the milk producer and the milk hauler. Likewise, every other case cited in the Appellate Division's opinion involved a company which was not in the delivery business which arranged for a delivery companyto make a delivery for it (Dairylea, supra [milk producer/milk hauler]; Federal Insurance Co. v Ryder Truck Rental, 189 AD2d 582 [1st Dept 1993], affd 82 NY2d 909 [motion picture company/theatrical trucking company]; US Fid & Guar. Co. v 67 Heritage Mut. Ins. Co., 230 F3d 331 [7th Cir 2000][concrete manufacturer/hauling company]; Toops v Gulf Coast Mar., Inc., 72 F3d 483, supra [crane supplier/common carrier shipper]; Chicago Ins. Co. v Farm Bur. Mut. Ins. Co. of Arkansas, Inc., 929 F2d 372 [8th Cir 1991] [farmers' co- op/agricultural hauler]; American Cas. Co. of Reading, Pa. v Denmark Foods, 224 F2d 461 [4th Cir 1955][pickle manufacturer/individual trucker]). Unlike all of the cases cited by the Appellate Division, the party which purchased the insurance in this case - DHL - is in the delivery business, and it hired MVP and the other contractors to make the deliveries which DHL's customers asked DHL to make. DHL used MVP to service DHL' s customers. Because the hiring party (DHL) and the hired party (MVP) were both in the delivery business, with MVP working exclusively for DHL, their businesses were not clearly separated, as in the cases cited by the Appellate Division. To the contrary, they were woven tightly together. There is a nexus between DHL and its contractors that did not exist in any of the cases where hired auto coverage was not found. This nexus underscores DHL' s need and desire to insure the MVP vehicles. It needed to insure contractor vehicles because federal law mandated $5 million of coverage. It desired to insure them because it achieved cost savings by doing so. And, 68 crucially, this coverage could only be provided through the hired auto provisions of its policies (R 1952-1953). Dairylea and the other authorities cited by the Appellate Division were all cases where an attempt was made to shoehorn coverage through a policy where it could not exist. The scenario in all of those cases is similar to what occurs when one ofDHL's customers places a package in DHL's hands for delivery. When DHL receives a package from its customer, the DHL truck is not covered under the customer's automobile policy because DHL assumes total control over the package once it receives it. That is not the relationship which DHL had with MVP. When DHL placed a package in MVP's hands, DHL retained rigid control over what MVP had to do to make the delivery, including direction over MVP's vehicles and its employees. DHL had the right to insure the MVP vehicles, which it knowingly did, and the DHL' s insurers had the right to calculate, charge and accept premiums for the coverage, which they did. The Appellate Division's decision states: "The fact that DHL required the MVP vehicles to have a certain appearance does not, in our view, show the requisite control over the vehicle within the meaning of a 'hired' automobile" (R 10). The Appellate Division's discussion of vehicle appearance is the only fact mentioned in its decision on the question ofDHL's control over MVP and its trucks. The Fourth Department erred in minimizing DHL's control. It 69 disregarded the multitude of factors evidencing DBL' s domination of MVP and its vehicles. DBL required that MVP operate out ofDBL's facility (R 1214, 1237), prohibited MVP from using subcontractors (R 1126, 1199), imposed security standards on MVP (R 1126, 1199-1200), dictated when MVP was required to terminate employees (R 1127, 1200-1201), imposed appearance standards (R 1203-1204), required drug testing and background checks (R 1127, 1205-1206), restricted employee turnover (R 1127, 1207), imposed driving standards which DBL could audit (R 1128, 1210), required vehicle painting and marks with DBL colors and logos (R 1128, 1132, 1210), prohibited deliveries for third parties (R 1129, 1210-1211, 1248), imposed survey and inspection requirements (R 1128, 1132, 1212, 1214-1215), set route specifications and audited the routes driven by MVP drivers (R 1145, 1241, 1244-1245), established customer contact rules (R 1146, 1222), imposed scanning and data recording requirements (R 1146- 1148, 1224-1226), set stringent uniform requirements (R 484, 1232-1234), specified which models of trucks could be used (R 483, 1232), established behavior standards for MVP's employees (R 484, 1234-1235), required that MVP personnel attend meetings (R 1239-1240), and required that MVP employees take direction directly from DBL (R 1238-1239). 70 When a customer called DHL and asked it to make a pickup or delivery in Buffalo, it may have been calling DHL's telephone number, but the entity which was going to do the hands-on work was MVP. Under DHL's business model, MVP became the face of DHL to its customers, and it was therefore imperative that MVP represent DHL well. To ensure this, DHL literally clothed MVP's workers and painted MVP's trucks to make them appear to be DHL's and controlled virtually every aspect ofMVP's performance, literally down to the color of their underwear and socks (R 484). DHL insisted upon stringent control over MVP and its trucks because, to the outside world, MVP's drivers and vehicles were viewed as DHL' s and reflected upon DHL' s reputation and the goodwill it sought to establish and maintain. DHL wanted and needed to insure the contractor vehicles. The Appellate Division's conclusion, on a CPLR 3211 motion to dismiss, that DHL could not and did not was manifest error. g) This case is like those where hired auto coverage has been found. A trend has been recognized in which courts have "extend[ ed] [hired auto] coverage to situations in which the insured is fairly viewed as having augmented his automobile fleet to meet his business needs" (Transport 71 Indemnity Co. v Liberty Mutual Insurance Co., 620 F2d 1368, 1372 [9th Cir 1980][emphasis added]). Nevertheless, in this case the Appellate Division did not discuss any of the pertinent cases. Manchester v Conrad (2012 WL 602185, supra) is highly instructive. The Manchester court focused on the cost-of-hire schedule in the policy and the payment and acceptance of premiums showing that the insurer intended to insure the Circle J truck as a hired auto under Alma Plantation's insurance policy. In language applicable here, Manchester explained: we find no merit to [the insurers'] argument that [the driver] was not operating the vehicle under the "direction or control" of the insured (Alma Plantation). At the time of the accident, ninety percent of ... Circle J's business[ ] was from Alma Plantation. Alma Plantation owned the sugar that Dedrick was transporting at the time of the accident. Alma Plantation was paying Dedrick's employer for the delivery of the sugar. Dedrick picked up the sugar from Alma Plantation's warehouse. Dedrick used front-end loaders, owned by Alma Plantation, to load the trailer with sugar. Dedrick then used scales, owned by Alma Plantation, to weigh the sugar load. Hence, hired auto coverage was found in Manchester based on the cost-of-hire schedule, the payment of premiums and that fact that 90% of the contractor's work was for the hiring party. In the instant case, 100% ofMVP's work was for DHL. As in Manchester, coverage should be found here. 72 Lumbermens Mutual Casualty Co. v Morgan (513 So2d 1283 [Fla Ct App 4th Dist 1987], review denied 520 So2d 585 [Fla Supreme 1988]) should also be considered. In Lumbermens, Gold Coast was the hiring company and Morgan the trucker. Similar to the control DHL exercised over MVP, in Lumbermens Morgan could not "take the Gold Coast sign from his truck and haul for someone else if Gold Coast had no loads for him" (id. at 1284). Given this control by the hiring company, the Morgan truck was held to be a hired auto for msurance coverage purposes. Canal Insurance Co. v Great West Casualty Co. (US Dist Ct, Minn, slip op reported at 2013 WL 5275789) also applies. In Canal Insurance the hiring company, just like DHL here, was in the business of transporting goods. It did so by contracting with other operators to make its deliveries, just like DHL does. Canal Insurance explained that "[ c ]ourts generally consider the level of control an entity exerts over a truck for purposes of determining whether that truck was 'hired' by the entity" for purposes of hired auto coverage. Considering numerous factors, Canal Insurance found the terms "hired auto" to be ambiguous and concluded that questions of fact existed whether the hiring company exercised sufficient control over the vehicles for them to be considered "hired." 73 Valley Forge Insurance Co. v Allstate Indemnity Co. (NY Sup Ct, Kings Co. 2014, reported at 2014 WL 3689650, supra) similarly found "issues of fact as to whether or not [the name insured] exercised sufficient control over the subject truck so as to trigger coverage under the Allstate auto policy under the 'hired auto' endorsement of the policy." Hired auto coverage has been found in many other cases.3 Many factual scenarios have been considered. While no case has been exactly like this one, the necessary outcome is manifest here. The intent of the parties must control. 3 Jefferson Insurance Company ofNew York v Travelers Indemnity Company (92 NY2d 363); Wolverine Insurance Co. v State Automobile Mutual Insurance Co. (415 F2d 1182, 1184 [6th Cir 1969]); Atlanta International Insurance Co. v Faulkner (821 F2d 649 [6th Cir table] [unofficially reported at 1987 WL 37796 [6th Circuit Rule 32.1 permits citation to its unofficially reported decisions]); Luizzi v Pro Transport (US Dist Ct, EDNY, slip op reported at 2013 WL 3968736); Bituminous Casualty Corp. v Travelers Ins. Co., 122 FSupp 197 [Minn 1954]) ); Federal Insurance Company v Executive Coach Luxury Travel, Inc. (128 Ohio St 3d 331 [Ohio Supreme 2010], recons. denied 120 Ohio St. 3d 1439; Westfield Insurance Co. v Nationwide Mutual Insurance Co. (99 OhioApp3d 114 [OH Ct App 2d Dist 1993]; Fratis v Fireman's Fund American Insurance Companies (56 Ca1App3d 339 [Cal Ct App 3d Dist 1976]); see generally 5 ALR4th 636, When is automobile "used under contract in behalf of or loaned to," insured within meaning of "hired automobile" provision of automobile insurance policy"(and Cumulative Supplement). 74 The insurers intended to insure the contractor vehicles as hired autos and DHL paid for the coverage. At a minimum, the question cannot be decided on a motion to dismiss. II. THE MVP VAN WAS BEING USED WITH DHL'S PERMISSION, AND COVERAGE ARISES OUT OF THE POLICY TERMS, NOT FROM RESPONDEAT SUPERIOR. a) Permissive use. The insurers contended below that even if the MVP vehicle involved in the accident was covered under DHL's policies as a "hired auto," such coverage did not exist at the moment of the collision with Mrs. Carlson's vehicle because the driver of the MVP truck was on a personal errand at the time. The insurers urged that the hired auto coverage was negated during the period that the driver was making personal use of the vehicle because he did not then have DHL's permission to use the truck. The insurers' permissive use argument fails. The "permission" language ofDHL's insurance policy states: The following are "insureds": . . . Anyone ... while using with your permission a covered "auto" you own, hire or borrow .... (R 1815 [ emphasis added]). "Permission" under the insurance policy thus appears in the same sentence as - and modifies - the word "own" and the word "hire." 75 "Permission" therefore has the same definition in relation to both vehicles which are "owned" and vehicles which are "hired" (R 1964 ). The "permission" language of the insurance policy exists so that the policy conforms to the requirements of Vehicle and Traffic Law §388. Section 3 88 renders a vehicle owner liable for injuries caused by a vehicle used with the owner's "permission." Construing "permission" as used in Section 388, this Court explained in Murdza v Zimmerman (99 NY2d 375, 379 [2003]): Public policy concerns surrounding the enactment of section 388 have long informed its application. We have acknowledged that this section "expresses the policy that one injured by the negligent operation of a motor vehicle should have recourse to a financially responsible defendant" . . . . Indeed, section 3 88 was designed to "remove the hardship which the common- law rule visited upon innocent persons by preventing 'an owner from escaping liability by saying that his car was being used without authority or not in his business. * * * [P]roof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner's permission, express or implied . . . Once the plaintiff meets its initial burden of establishing ownership, a logical inference of lawful operation with the owner's consent may be drawn from the possession of the operator. (Citations omitted). Murdza involved an "owned" vehicle, but because "permission" under DHL' s policy refers in the same sentence to both "owned" and "hired" vehicles, 76 "permission" with respect to "owned" has the same definition as "permission" with respect to "hired." The Murdza definition, and the public policy goals accomplished through it, therefore carry over to the hired auto coverage at issue in this case. The applicability ofMurdza's public policy concerns to this case cannot be stated too forcefully. Federal law required that the MVP vehicle have insurance coverage of no less than $5 million because it was authorized to carry hazardous materials. This coverage was provided under DHL' s policies. Such coverage cannot evaporate if an MVP driver takes a personal detour. Otherwise, a vehicle carrying hazardous materials is capable of being underinsured for a catastrophic loss based upon the whims of a driver. That is why, as plaintiffs expert explained, when a vehicle "is a 'hired auto' it is considered a 'hired auto' for the entire time it is contracted, regardless of the purpose of its use at the time of the accident" (R 1953). The question of "permission" in the specific context of a hired auto coverage dispute was addressed in Lumbermens Mutual Casualty Co. v Morgan (513 So2d 1283, 1284, supra). Lumbermens recognized that the party which hired the truck had given permission for its use even though it did not own the truck because the truck made deliveries exclusively for the party which hired it. Likewise in the case at hand. DHL not only permitted MVP to use its trucks, 77 DHL required that MVP use them to carry out the requirements of the cartage agreement. If an owner gives a person permission to use the owner's vehicle, and the permissive user allows a third person to use it, permission for the third person's use is imputed to the owner regardless of whether the owner had forbidden it (MV AIC v Continental National American Group Co. (35 NY2d 260,265 [1974]). In this case MVP's permission to Mr. Porter, allowing him to use the van which was involved in the accident, is imputed to DHL. In the Carlson I personal injury action, a determination was made, and affirmed by the Appellate Division, that the MVP driver was using its van truck with MVP' s permission at the time of the accident. MVP was thus held statutorily liable under Vehicle and Traffic Law §388 (see Carlson I, 53 AD3d at 1133). Because the driver had MVP's permission, he necessarily had DHL's permission too. "Whether [DHL] constructively consented to [the MVP driver's] use of the van depends ... on his status as either a thief or a permissive user" (Murdza v Zimmerman, 99 NY2d 375,382). Carlson I established the driver was not a thief; indeed, it expressly found that he was a permissive user (53 AD3d at 1133). He was with respect to both the owner and hirer of the vehicle (see also Carey v AAA Con Transport Inc., 61 AD2d 113 [3d Dept 1978][coverage 78 existed where car owner hired a vehicle transport company to drive her car and, notwithstanding that the transport company's driver took a 300 mile detour and was on a personal trip when the accident occurred, constructive permission was imputed to the owner]). b) That DHL was not vicariously liable for MVP 's negligence has no bearing on the question whether the MVP truck was insured under DHL 's policies. The insurers also contended below that coverage under DHL' s policies only existed for the MVP truck in situations where DHL was held vicariously liable for MVP' s conduct. This argument was not accepted by the Appellate Division, and it derives no basis from the insurance policies. "Vicarious tort liability through respondeat superior" should not be confused with "coverage under an insurance policy." That the concepts are different is illustrated in this case by the Fourth Department's finding in Carlson ! that even though MVP was not vicariously liable under respondeat superior for the actions of its driver because he was on a personal errand at the time of the accident (Carlson I, 53 AD3d at 1132), MVP remained "statutorily liable for [the driver's] negligence as owner of the vehicle" because he was a permissive user of the vehicle (id. at 1133). Because of this finding, plaintiff was able to 79 collect against MVP's insurance coverage even though MVP was not vicariously liable for its driver's negligence (R 1501 ). DHL' s insurance policy states that hired auto coverage is provided to "anyone else" (R 1815). It is not coverage for DHL; it is provided to someone else, a third party. Nor does the policy contain any limitation restricting the coverage to instances where DHL is vicariously liable for a third party. It is stand alone coverage for that third party. It had to exist in this case to satisfy the federal law requirement that contractor vehicles - including MVP's -have coverage of no less than $5 million. The respondeat superior argument the insurers have made in this case was also made by the insurers in Manchester v Conrad (2012 WL 602185, supra). In Manchester, the hirer (Alma Plantation) was held not to be vicariously liable for the negligence of the Circle J driver, but the Circle J truck was found to be insured under the hired auto coverage provisions of Alma Plantation's policy. The same analysis applies here. 80 III AAIC'S INSURANCE POLICY WAS "ISSUED OR DELIVERED" IN NEW YORK, AND THE APPELLATE DIVISION'S HOLDING TO THE CONTRARY (1) REQUIRES AN OVERTURNING OF THIS COURT'S PRESERVER DECISION, AND (2) UNDERMINES THE REMEDIAL PURPOSES OF INSURANCE LAW §3420. In addition to the dismissal motions of both insurers - National Union and AAIC - contending that the MVP truck and driver were not insured under DHL's policies, AAIC filed a separate motion contending that it was not subject to suit in New York under Insurance Law §3420. Plaintiffs claims against the insurers were brought under Insurance Law §3420, which allows for direct action against an insurer based upon a judgment obtained against its insured if the insurance policy was "issued or delivered" in New York. AAIC asserted that the policy it issued to DHL was not "issued or delivered" in this State. Insurance Law §3420 provides that: (a) No policy or contract insuring against liability for injury to person ... shall be issued or delivered in this state, unless it contains in substance the following provisions or provisions that are equally or more favorable to the insured and to judgment creditors: * * * (2) A provision that in case judgment against the insured or the insured's personal representative in an 81 action brought to recover damages for injury sustained or loss or damage occasioned during the life of the policy or contract shall remain unsatisfied at the expiration of thirty days from the serving of notice of entry of judgment ... , then an action may . . . be maintained against the insurer under the terms of the policy or contract for the amount of such judgment not exceeding the amount of the applicable limit of coverage under such policy or contract. (Emphasis added). The motion court in this case rejected AAIC's argument that the policy it issued to DHL had not been issued or delivered in New York. The court explained: (R 22). AAIC alleges that the Plaintiffs cannot assert a direct claim against it because the policy at issue was not delivered or issued in New York State (see Insurance Law§ 3420). The law is clear that the location of the insured and the risk to be insured are the determinative factors rather than where a policy is actually delivered or issued (American Ref-Fuel Co. v Employers Ins. Co., 265 AD2d 49 [2nd Dept 2000]). Here it is undisputed that the accident took place in New York State while the named insured was doing business within the State. Therefore, AAIC's argument is entirely without merit. AAIC appealed from this ruling. However, at the Appellate Division, AAIC acknowledged that the standard to be applied was the one set forth by this Court in Preserver Ins. Co. v Ryba (10 NY3d 635) even though Preserver had 82 interpreted the terms "issued for delivery" used in a former version of subdivision d of Insurance Law §3420, and not the terms "issued or delivered' which appear in subdivision a of the statute. Recognizing that the Preserver standard controlled, AAIC's brief to the Fourth Department stated: The seminal case on this issue is Preserver v Ryba, 10 N.Y.3d 635 (2008). * * * In July 2008, following the Preserver case, the language in section ( d) of the statute changed and now reflects a requirement identical to section (a) - that the policy be 'issued or delivered,' not 'issued for delivery.' See 2008 Sess. Law News ofN.Y. Ch. 388 (S. 8610) (McKinney's). However, the case law following the 2008 statute amendment still looks at "delivery" in terms of where (in what state) the insured and risk are located. See Admiral Ins. Co. v Joy Contractors, Inc., 81 AD3d 521,523 (1st Dept 201 l)(holding that NY Ins. Law §3420 did not apply to a policy issued to Joy, a New Jersey corporation with a New Jersey place of business, and delivered to New Jersey). Pursuant to Preserver, and its progeny, a policy is not "issued for delivery" in New York where the policy does not cover a New York insured and New York risk. (see Excerpt from AAIC App Div brief, pp 7-8, at Attachment B to this brief). As AAIC recognized in its Appellate Division brief, and as the First Department found in Admiral Ins. Co. v Joy Contractors, Inc. (81 AD3d 521, 523 [1st Dept 2011], mod on other grounds 19 NY3d 448), the Preserver 83 standard continues to apply despite the 2008 amendment of subdivision ( d) of Insurance Law§ 3420 which substituted the words "issued or delivered" for "issued for delivery" in that subdivision, bringing subdivision ( d) into conformity with subdivisions (a) and (e) of the statute. AAIC's Appellate Division Reply brief similarly recognized that the Preserver standard continues to control (see Excerpt of AAIC Reply brief at Attachment C to this brief). Plaintiffs brief to the Appellate Division agreed that the Preserver standard applied (Attachment D to this brief). The parties thus agreed in their Appellate Division briefs that the Preserver standard controlled. Their only disagreement was how to apply it. AAIC argued that the insurance policy it wrote for DHL was not issued or delivered in New York because the Preserver analysis should be guided by conflict of law principles such that DHL should not be viewed as located in this State because New York was not the ''principal location of the insured risk" (see Attachment B to this brief, p 8 [ emphasis added]). Plaintiff disagreed, contending that conflict of law principles have no bearing on the issue and that, under Preserver, the question is simply whether the insured was located in New York with risks existing here, and not whether its principal location was in New York. 84 The Fourth Department expressly disagreed with both parties, finding that the Preserver standard did not apply. The Appellate Division's memorandum states: Here, plaintiff may not recover against AAIC pursuant to section 3420(a)(2) because the policy was not "issued or delivered in this state" (id.). The parties and the court have improperly conflated the phrase "issued or delivered" with "issued for delivery," which was used in the former version of Insurance Law § 3420(d), and therefore the definition of "issued for delivery" is not relevant here (see Preserver Ins. Co. v. Ryba, 10 NY3d 635, 642). The policy here was issued in New Jersey and delivered in Seattle, Washington, and then in Florida. It was not issued or delivered in New York, and therefore the first cause of action of the complaint against AAIC must be dismissed ( cf American Cont. Props. v. National Union Fire Ins. Co. of Pittsburgh, 200 A.D.2d 443, 446--447). (R 6 [ emphasis added]). The emphasized language from the Appellate Division's decision shows that the Fourth Department was disagreeing, not only with the rationale of the motion court, but also with the arguments of the parties, including AAIC. The Appellate Division expressly found that the terms "issued for delivery" as construed in Preserver cannot be "conflated" with the terms "issued or delivered" found in subdivision (a) of Section 3420 and in the post-Preserver amendment of subdivision ( d) of the statute. The Appellate Division also expressly found that the Preserver definition of "issued for delivery" is not 85 "relevant" here because Preserver was interpreting the pre-amendment language of subdivision ( d). If, as the Appellate Division found, the pre-amendment language of subdivision ( d) of Section 3420, as construed in Preserver, must be given a different meaning than the language of subdivision (a), what was the effect of the 2008 amendment of subdivision ( d) which conformed its language to the language of subdivision (a)? Amended subdivision (d) now has the same language as subdivision (a), i.e. "issued or delivered." The Appellate Division held that this language has a different meaning from "issued for delivery," which were the words construed in Preserver. Because, after the 2008 amendment, subdivisions (a) and (d) of Section 3420 now contain the same language, they must have the same definition. The Appellate Division held that the definition is not the one announced in Preserver. That means that the post-Preserver amendment to subdivision ( d) was a substantive amendment, changing the meaning of that subdivision and overturning Preserver. Not so. Because the Appellate Division adopted an analysis which neither party was urging, it did not have the benefit of briefing or hearing the parties' views on that analysis. But the Appellate Division briefs of both parties were correct 86 in their agreement that "issued for delivery" and "issued or delivered" must be given the same meaning. Preserver continues to set the standard. Linguistically, there is no reason for the terms "issued or delivered" to be defined differently from "issued for delivery." Perhaps the Appellate Division viewed the 2008 amendment to Section 3420 as being a reaction to Preserver. It was not. Preserver was decided June 10, 2008. Amendment of Section 3420 had been under consideration long before Preserver and for reasons unrelated to the issue considered in Preserver. The amendment was approved by both the Senate and Assembly on June 23, 2008, just 13 days after Preserver was decided. The Governor signed it into law on July 21, 2008. That the 2008 amendment to Section 3420 has nothing to do with Preserver - and was not intended to overrule it - is confirmed by reading the legislative history contained in the Bill Jacket to the 2008 amendment (see New York Bill Jacket, 2008 S.B. 8610, Ch. 388). Preserver is never mentioned. The amendment to subdivision ( d) appears to have been cosmetic only, to conform the language in subdivision ( d) to the "issued or delivered" language which already appeared in subdivisions (a) and (e) of the statute. This cosmetic tweak had nothing to do with the substantive reason behind the major changes the 2008 amendment made to other provisions of the statute. 87 The 2008 amendment was enacted to provide a broader category of cases where tort victims could bring direct actions against insurance companies and to preclude insurers from disclaiming coverage on the ground of late notice unless they can show prejudice (New York Bill Jacket, 2008 S.B. 8610, Ch. 388, supra). The substance of the 2008 amendment thus expanded the procedural and substantive rights for direct recovery against insurers. The Appellate Division's holding in this case has the opposite effect. The Fourth Department's opinion is in disagreement with the First Department's decision in Admiral Ins. Co. v Joy Contractors, Inc. (81 AD3d 521, 523, mod on other grounds 19 NY3d 448, supra), which recognized that the Preserver standard continues to apply even after the 2008 amendment to Section 3420( d). Most importantly, the Appellate Division's decision has enormous policy ramifications. The purpose of Insurance Law §3420 is to provide an avenue of relief to tort victims by allowing them to bring a direct action against insurers. The Fourth Department's decision deprives New York tort victims of this benefit in any case where an insurance policy is issued by an out-of-state insurer and is delivered to an out-of-state office of its insured, regardless of whether the insured has a location in this State and creates risks here. This rule encourages insurers to avoid locating their own offices in New York (scaring business away 88 from this State), and to always deliver their policies to an office of their insured which is located outside of the State. Simply by doing this, under the rule announced by the Fourth Department in this case, the protections of Insurance Law §3420 will be defeated. Another consequence of the Fourth Department's approach is that in cases involving multiple insurers (like this case), if one of the insurers is able to avoid a Section 3420 claim, the plaintiff or the insured will have to bring multiple actions in multiple jurisdictions to collect amounts the insurers are obligated to pay. Requiring multiple lawsuits to recover for a single claim from the same risk the insured created in New York undermines the goals of Section 3420. The rule must be, in accordance with Preserver, that remedies under Section 3420 are available if the insured and its risks are located in New York. AAIC's insured in this case was DHL, which had offices in New York and created risks here. Plaintiff was therefore entitled to commence an action under Section 3420 against AAIC in New York. 89 IV. PLAINTIFF'S CAUSES OF ACTION ALLEGING DECEPTIVE BUSINESS PRACTICES, MISREPRESENTATION AND BAD FAITH SHOULD BE RE-INSTATED. General Business Law§ 349(a) provides that "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this State are hereby declared unlawful." The statue establishes a private cause of action which may be brought by "any person who has been injured by reason of any violation of this section" (§349[h]). Plaintiffs complaint alleges that defendants: misrepresented to plaintiff Carlson, and their insureds, MVP and Porter, that there is no available insurance coverage under the subject policies to satisfy the outstanding judgment. * * * [U]pon information and belief, these defendants have engaged in an industry-wide practice of falsely claiming lack of available liability coverage, creating damages to similarly situated insureds faced with judgments, and members of the public at large, like plaintiff Carlson, who are injured by their insureds' negligence. (R 388-389). Plaintiffs complaint thus alleges a "deceptive act or practice directed toward consumers" which "resulted in actual injury to a plaintiff," in compliance with the pleading requirements for a deceptive business practice cause of action 90 (see Blue Cross and Blue Shield of New Jersey v Philip Morris USA Incorporated, 3 NY3d 200, 205-206 [2004]). Plaintiff should now be allowed to conduct discovery (see JD&K Associates, LLC v Selective Ins. Group, Inc. (118 AD3d 1402 [4th Dept 2014][question whether insurer's disclaimer of coverage was part of a pattern of conduct reflecting a deceptive practice required discovery]; Makuch v NY Central Mutual, 12 AD3d 1110, 1111 [4th Dept 2004] ["at this early prediscovery phase, these allegations sufficiently plead violations of General Business Law § 349]). The reason DHL and the defendant insurers were in a position to deceive in this case is that the hired auto coverage - covering MVP and Porter - existed under the policies issued to DHL. The scenario presented here - where a party is insured under another's policy - creates a temptation for non-disclosure of coverage to the insured. Whether DHL and the insurers acted upon the temptation requires discovery, and another reported decision provides support for allowing it. American Protection Insurance Co. v Airborne, Inc. (476 FSupp2d 985 [ND Ill 2007]) involved DHL' s predecessor, Airborne Express, and refers to decision-making by Airborne's in-house counsel Mark Dietz, who is in-house counsel for DHL now (R 390). American Protection shows how Airborne 91 attempted to control the litigation and payment in that case, where Airborne had exposure under a $1 million deductible. American Protection involved an underlying Garcia case. Mr. Dietz had been controlling the Garcia litigation (PACER, Case 1 :05-CV-00874, Document #43, pp 160, 176, 180, page ID#879) and sought to impose a no-settlement position on the insurer. Raising the same arguments that the defendants have raised in the instant case, Dietz and Airborne (now DHL) took the position in Garcia that the insurer should not settle because Airborne was not liable for the negligence of the driver because he "(1) was an independent contractor and not an Airborne employee, and (2) was acting beyond the scope of his employment" (476 FSupp2d at 988). Ultimately the insurer broke ranks with Airborne and Dietz and entered into a settlement with the Garcia plaintiff, implicitly recognizing that the driver was covered under Airborne's commercial automobile policy. The insurer may have reasoned that coverage existed under the hired-auto provisions of Airborne's policy. American Protection upheld the insurer's decision to settle, and found DHL liable for payment of its $1 million deductible. American Protection was decided March 9, 2007, after the jury's verdict in the underlying Carlson I action but prior to the Fourth Department's decision in Carlson I (53 AD3d 1129 [4th Dept 2008]). It is fair to question whether, 92 upon the decision in American Protection if not sooner, DHL knew or should have known that hired-auto coverage was or might be available to Mr. Porter and MVP in this case. Under its fronted insurance arrangement (see R 1950), DHL is liable in the present case for the first $3 million of hired-auto exposure. Whether DHL engaged in a deceptive business practice to avoid that liability here, and whether it has done so in other cases, is ripe for consideration. Plaintiffs causes of action for misrepresentation and bad faith should also survive the motions to dismiss. The gravamen of plaintiffs complaint is that that DHL caused - and the other defendants acquiesced in - the non-disclosure of the hired-auto coverage available to Mr. Porter and MVP (R 384-390). This is not a case where plaintiff can plead with particularity what was said, when it was said, and who said it because no one said anything. The hired auto coverage was not disclosed. The misrepresentation and bad faith took the form of silence. It was misrepresentation and bad faith by omission. "Simply put, sometimes [specific] facts [of fraud or misrepresentation] are unavailable prior to discovery" (Pludeman v Northing Leasing Systems, Inc., 10 NY3d 486, 493 [2009]). This is one of those cases. 93 CONCLUSION The orders appealed from should be reversed. It cannot be said, as a matter of law on a motion to dismiss, that the MVP truck and driver were not insureds under the hired auto provisions of the insurance policies. Moreover, the AAIC insurance policy was delivered to DHL in New York, rendering AAIC subject to suit in this State under Insurance Law §3420. Edward J. Markarian, Esq. James E. Brown, Esq. Angelo S. Gambino, Esq. Timothy Hudson, Esq. Of counsel on the brief \16914.0002\611669.doc Respectfully submitted, ~">71'~ Edward J. Markarian, Esq. Magavem Magavem Grimm LLP 1100 Rand Building 14 Lafayette Square Buffalo, New York 14203 ph: 716-856-3500 fax: 716-856-3390 Of Counsel on the appeal to: Brown Chiari LLP Attorneys for plaintiff-appellant 2470 Walden Avenue Buffalo, New York 14225 ph: 716-681-7190 fax: 716-681-8136 94 ATTACHMENT A POLICY EXCERPT SHOWING SYMBOLS OF COVERAGE 1814 Exhibit "K" Annexed to Supplemental Affirmation of Chiari. POLICY NUMBER: CA 979-85-51 COMMERCIAL AUTO CA 00 01 1001 BUSINESS AUTO COVERAGE FORM Various prov1s1ons in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. SECTION I - COVERED AUTOS I.fem Two of the Declarations shows the ~autos" that are covered "autos" for each of your coverages. The- following numerical sy,mbols describe the "autes" that may be covered "autos". The symbols ente·red next to a coverage on the Declarations designate the only "autos" that are coveFed "autos". Throuj;jhout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "tis" and "our" refer to the Company providing this insurance. . . Other words and phrases that appear in quotation marks have special meaning. Refer to Section. V - Definitiofls. A. Description Of Covered Auto Designation Symbols Symbol Descriptjon .. Of Covered A.uto Designation Symbols 1 Any "Auto" rowned: a Aµtps" - 2 Only those· "autos" you. own (and for Liability Coverl:lge a~y: "trailers" you. ' 'Only.. :. . don't own. while attached to·· power units you own}. This inclupes those· "autos" you acquire ownership of after the pol!cY be;gins: · · 3· I Owned Private .Only the private passenger- Nautos" you own; .This im;ludes those pnvate Passenger passenger "autos" you acquire ownership of- afi:er the po_!icy begins.. . · . ~.._·.=.· _" Al!!:9-~.~ Qnrv._ . 4 Owned -Autos" ()nly those "autos" you own :that are n·ot oftne·private passengeF typ~ (and· fo~--· Other.Than Pri- Liability Coverage any "trailers" you don't own.whil.e attachec,i to power units vate ·Passenger you own). This ini:ludes tho.se gaiJtos" not of the private passen-ger, type you "Autos" Only acquire ownership of after the policy be9ins. 5 Owned "Autos" Only those "autos" you own that are required to have No-Fault benefits in the Subject To No- state where they are licensed or principally garaged. This includes those j Fault uautos" you acquire ownership of after the policy begins provided they are required to have No-Fault benefits in the state where they are licensed or I principally garaged. ~------'---· - -·- ·- 6 Owned "Autosu Only those "autos" you own that beeause of the law in the state where they Subject To A are licensed or principally garag~d are required to have and cannot reject Compulsory Un- Uninsured Motorists Coverage. This includes those "autos" you aequire insured Motor- ownership of after the policy begins provided they are subject to the same ists Law state uninsured motorists requirement. ··----·-· 7 Specifically De- Only those "autos". described in Item Three of the Declarations for which a . scribed "Autos" premium charge is shown (and for Liability Coverage any "trailers" you don't own while attached to any power unit described in Item Three) . -- .. _ l;3 Hired "Autos" Only those "autos'' you lease, hire. rent or borrow. This does not include Only any "auto" you lease, hire, rent or borrow from any of your "employees!' partners (if you .are a partnership), members (if you are a limited liability company) or members of their households: 9 Nonowned Only those "autos" you do not own. lease, hire, rent or borrow that are "Autos" Orily used in connection with your business. This includes "autos" owned by your "employees", partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs. ·-------- - - -·-----~·-~--·- A-1 [This page intentionally left blank.] A-2 ATTACHMENT B EXCERPT FROM AAIC APPELLATE DIVISION BRIEF To be Argued by: · MANDIE R. FORMAN, ESQ. Time Requested for Argument: (15 Minutes) STATE OF NEW YORK ~upreme @nurt APPELLATE DIVISION-FOURTH JUDICIAL DEPARTMENT . Appellate Division Docket Number: CA 13-01599. MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D'AGOSTINO CARLSON, Deceased, and as Assignee of WILLIAM PORTER, Plaintiff-Respondent, vs. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., Defendants, AMERICAN ALTERNATIVE INSURANCE CO., Defendant-Appellant, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA and DHL EXPRESS (USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., Defendants. Niagara County Index No. El43033/ll. BRIEF FOR DEFENDANT-APPELLANT AMERICAN ALTERNATIVE INSURANCE CO. RUBIN, FIORELLA & FRIEDMAN LLP MANDIE R. FORMAN, ESQ., Of Counsel Lead Counsel for Defendant-Appellant 630 Third A venue, 3rd Floor New York, New York 10017 Telephone: (212) 953-2381 THE TARANTINO LAW FIRM, LLC ANN M. CAMPBELL, ESQ., Of Counsel Local Counsel for Defendant-Appellant 1500 Rand Building 14 La.fayette Square Buffalo, New York 14203 Telephone: (716) 849-6500 BATAVIA LEGAL PRINTING, INC.-Telcphonc (866) 768-2100 A-3 the confines of the statute. (R. 10). As will be demonstrated below, where the accident occurred and the conduct of business in New York has no bearing on this analysis. Had the Court applied the standard correctly it should have concluded that New York Insurance Law§ 3420 does not apply to plaintiff's claim against AAIC because AAIC's insureds and the risks to be insured were located in Washington, and then Florida, but never New York. 1. The AAIC Policy Was Not "Issued for Delivery" in New York The seminal case on this issue is Preserver Ins. Co. v. Ryba, 10 N.Y.3d 635 (2008). There, the Court of Appeals held that a policy is 'issued for delivery' in New York ifit covers both insureds and risks located in this state. Id. at 642 (emphasis added), citing Columbia Cas. Co. v. National Emerge[lcy Servs., 282 A.D.2d 346, 347 (1st _Dep't 2001); see also American Ref-Fuel Co. of Hempstead v. Employers Ins. Co. of Wausau, 265 A.D.2d 49, 53 (2d Dep't 2000). The facts of Preserver are relatively straightforward. Plaintiff, Arthur Ryba, employed by subcontractor East Coast Stucco & Construction, Inc., allegedly fell from scaffolding while performing work on premises in Orangeburg, New York, owned by general contractor J oaquim Almeida. Id. at 6.3 8. At the time of the incident, East Coast Stucco, a New Jersey company, maintained a workers' compensation and employers' liability policy issued by Preserver Insurance Company, also of New Jersey. Id. This policy was both underwritten and delivered in New Jersey. Id. Preserver commenced a declaratory judgment action and moved for summary judgment on the grounds that it did not owe · cov~rage to East Coast Stucco or Almedia and therefore, did not owe an obligation to disclaim under Insurance Law§ 3420 ( d). Id. at 639. The Court of Appeals overturned the Trial Court and Appellate Division's Orders, and found that Preserver was correct in that its policy had not been "issued for delivery" in New York and therefore § 3420 was inapplicable. Id. at 642. The Court inquired if, -7- A-4 despite the fact that the subject policy was issued ("underwritten") and delivered in New Jersey by a New Jersey insurer to a New Jersey insured, id. at 638, the policy could be considered 'issued for delivery' in New York. The Court found in the negative. Id. at 642. Specifically, the Court noted that despite the fact that New York was included as an "Item 3.C." state in Preserver's policy, and therefore, covered risks in New York, East Coast Stucco is a New Jersey Corporation. Since both elements were not present, § 3420 did not apply. Iri July, 2008, following the Preserver case, the language in section ( d) of the statute changed and now reflects a requirement identical to section (a)-- that the policy be 'issued or delivered,' not 'issued for delivery.' See 2008 Sess. Law News of N.Y. Ch. 388 (S. 8610) (McKINNEY'S). However, the case law following the 2008 statute amendment still looks at 'delivery' in terms of where (in what state) the insured and risk are located. See Admiral Ins. Co. v. Joy Contractors, Inc., . 81 A.D.3d 521,523 (1st Dep't 2011) (holding that NY Ins. Law§ 3420 did not apply to a policy issued to Joy, a New Jersey corporation with a New Jersey place of business, and delivered to New Jersey). Pursuant to Preserver, and its progeny, a policy is not "issued for delivery" in New York where the policy does not cover a New York insured and New York risk. In order to determine the location of the insured and the risk to be insured, it requires an analysis_ of factors looked at in a choice of law analysis. In insurance cases, the 'principal" location of the insured risk' will generally determine which state's law applies (and in this case, whether a New York Insurance statute can apply to this claim). See Certain Underwriters at Lloyd's, London v. Foster Wheeler Corp., 36 A.D.3d 17, 22-23 (1st Dep't 2006), affd, 9 N.Y.3d 928, 844-N.Y.S.2d 773, 876 N.E.2d 500 (2007); see also Steadfast Ins. Co. v. Sentinel Real Estate Corp., 283 A.D.2d 44, 50 (3d Dep't 2001 ). In order to determine 'principal location of the insured risk,' courts will look -8- A-5 [This page intentionally left blank.] A-6 ATTACHMENT C EXCERPT FROM AAIC APPELLATE DIVISION REPLY BRIEF To be Argued by: · MANDIE R. FORMAN, ESQ. Time Requested for Argument: (15 Minutes) STATE OF NEW YORK §upr£mt o.tnurt APPELLATE DIVISION-FOURTH JUDICIAL DEPARTMENT Appellate Division Docket Number: CA 13-01599. MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D'AGOSTINO CARLSON, Deceased, and as Assignee of WILLIAM PORTER, Plaintiff-Respondent, vs. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., Defendants, AMERICAN ALTERNATIVE INSURANCE CO., Defendant-Appellant, . . NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA and DHL EX:PRESS .(USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., Defendants. Niagara County Index No. E143033/11. REPLY BRIEF FOR DEFENDANT-APPELLANT AMERICAN ALTERNATIVE INSURANCE CO. RUBIN, FIORELLA & FRIEDMAN LLP MANDIE R. FORMAN, ESQ., Of Counsel Lead Counsel for Defendant-Appellant 630 Third A venue, 3rd Floor · New York, New York 10017 Telephone: (212) 953-2381 THE TARANTINO LAW FIRM, LLC ANN M. CAMPBELL, ESQ., Of Counsel Local Counsel for Defendant-Appellant 1500 Rand Building 14 Lafayette Square Buffalo, New York 14203 Telephone: (716) 849-6500 BATAVIA LEGAL PRINTING, INC.-Telephone (866) 768-2100 A-7 that it could not, sirice the insured and the risk were located in New Jersey. Id. at 642. The Court considered the fact that the insured maintained its only office in New Jersey, but the Court did not state or even imply that the policy would have been deemed to have been issued for delivery in New York if the insured had an office - any type of office - in New York. "" Moreover, Respondent's position defies reason, because if Respondent were correct, then the same insurance policy would be deemed to have been issued for delivery in ~very state in which Respondent had any office, and as a matter oflogic an insurance policy could have been delivered in only a single state. In fact, New York law is well-established that in the context of choice oflaw analysis, where, as here, an insured's risks are in several states, the state of the insured's domicile is "properly regarded as a proxy for the principal location of the risks insured under the policy." Jiminez v. Monadnock Constr., Inc., 109 A.D.3d 514, 517 (2nd Dep't 2013); see also Steadfast Ins. Co. v. Sentinel Real Estate Corp., 283 A.D.2d 44, 50 (3d Dep't 2001); Certain underwriters at Lloyd's, London v. Foster Wh.eeler Corp., 36 A.D.3d at 24 (''where it is necessary to determine the law governing a liability insurance policy covering risks in multiple states, the state of the insured's domicile should be regarded as a proxy for the principal location of the insured risk"). Respondent's argument that the AAIC policy was "issued for delivery" in New York because it covers risks in multiple states (Respondent's Brief, pages 5, 13 - 14) ~isses the point. There is no dispute that the coverage territory of the AAIC policy is throughout the United States. That is usually true for most liability insurance policies issued to most insureds. However, that alone does not convert every such policy into one that was "issued for delivery" in New York. Morever, Respondent's argument ignores the requirement that for a policy to be deemed "issued for delivery" in New York, it must "cover[] both insureds and risks located in this state." Preserver Ins. Co. v. 4 A-8 ~---- Ryba, 10 N.Y.3dat 642 (emphasis added). Respondent's argument that AAIC is "attempting to transform this case into a choice oflaw case" (Respondent's Brief, pages 6, 10 - 13) is a red herring. AAIC makes no argument here concerning which state's law applies. Instead, AAIC has cited those cases which Respondent has characterized as "choice of law" cases because they are instructive as to important issues here: the . . meaning of the terms "delivery," "issued," and "location of risk." See Steadfast Ins. Co. v. Sentinel Real Estate Corp., 283 A.D.2d at 50 (examining "delivery'' as the state "where the contract is made"); Certain Underwriters at Lloyd's, London v. Foster Wheeler Corp:, 36 A.D.3d at 24 (examining "location of risk" as the state of the insured's domicile), see also Id. at 19 (examining "issued" as the time a policy is created). When Foster Wheeler is read in conjunction with cases examining New York Insurance Law§ 3420, it is clear that the location of the risk is the state where the policy is delivered, unless some other specific location or work is specified in the policy. See. TIG Ins. Co. v. Martin, 2003 WL 25796732, * 5 (E.D. N.Y. 2003) (policy issued by a Texas insurer for delivery to an Indiana insured; not issued for delivery in New York where policy was not specific to the New York camp orto otherworkinNewYork). See also Marino v. N. Y. Tel. Co., 944F.2d 109 (1991) (policy not delivered or issued for delivery in New York where the insured was a New Hampshire corporation and the policy was not specific to the New York Telephone building contract or other work in New York). In this case, AAlC's policy does not purport to cover a New York insured, nor does it purport to cover any specific work in New York. For the reasons set forth above, Respondent's Insurance Law§ 3420 claim fails against AAIC. 5 A-9 [This page intentionally left blank.] A-10 ATTACHMENT D EXCERPT FROM PLAINTIFF'S APPELLATE DIVISION BRIEF A-11 "issued for delivery" in New York, even where policy was issued outside of the State and listed the address of the insured's corporate headquarters out of State). Indeed, the Court of Appeals decision of Preserver Ins. Co. v. Ryba, 10 N.Y.3d 635 (2008) is instructive on this issue. That case involved a policy that.was delivered in New Jersey by a New Jersey insurer to a New Jersey insured. The Court, nonetheless, addressed the question of whether the policy was "issued for delivery" in New York, stating that a policy is "issued for delivery" in New York if it covers both insureds and risks located in this state. Id. at 642; Columbia Cas. Co. v. National Emergency Services, 282 A.D.2d 346,347 (1st Dept. 2001); see also, American Ref-Fuel Co. of Hempstead, supra at 53. Finding that the polic)'. covered risks located in New York, the Court nonetheless found that the insured was not located in New York, specifically relying on the fact that its only offices were located in New Jersey (emphasis added). Preserver Ins. Co. v. Ryba, supra at 642. Significantly, however, the Court's analysis of this issue did not refer to the insured's "principal place of business," "domicile," or "state of incorporation", and in the instant case, it is undisputed that Airborne/DHL maintained at least one office in New York State at the time of the subject accident. In fact, the New York State Department of State Division of Corporations website verifies that Airborne Express, Inc. was an active corporation in New York State through April, 2013 .1 As will be discussed in detail below, Appellant cites to a number of "choice of law" cases that purport to define "principal location of the insured risk" in attempting to transform this case into a choice of law case, which it is not. Indeed, as Justice Boniello recognized when he cited the American Ref-Fuel Co. of Hempstead case in his Memorandum Decision, the only question before him, and now before this Court, is not which state's law should apply, but 1 Upon information and belief, the Court may take judicial notice of this fact by consulting the New York State Department of State Division of Corporations website. 6 A-12 I I '· ! ~ : t rather, the only question properly raised by defendant-appellant is whether plaintiff-respondent has a right, pursuant to New York law, and particularly Section 3420 of the Insurance Law, to bring a direct action against the defendant-appellant in New York State, and that is purely a question of how New York is going to construe its own statute. Consequently, there is no need to address the "principal location of the insured risk," as defendant-appellant suggests. Instead, as the Court of Appeals made clear in Preserver, in the context of making a determination with respect to whether an insurance policy has been "issued for delivery" in New York, the only questions that need to be addressed are whether the insured has a location in the State of New York, regardless of whether that location is the principal location, and whether the insured performs work within the State that exposes the public to risk. Accordingly, since each of those questions would be answered in the affirmative in this case, it is respectfully submitted that the decision of Justice Boniello should be affirmed. Moreover, to the extent that defendant-appellant attempts to support its position with anything other than choice of law cases that are irrelevant in this context, those cases are easily distinguished factually from this case. For example, in Schneider v. Canal Insurance Co., (98- CV-5368, 1999 WL 689476 (E.D.N.Y., September 1, 1999)), the policy had been issued by a South Carolina corporation to an insured doing business in Florida, ~d there was no evidence whatsoever indicating that the insured had ever maintained any location within the State of New York. Similarly, TIG Insurance v. Richard Martin, (OO-CV-5766, 2003 WL 25796732 (E.D.N.Y. February 28, 2003)) which is cited by defendant-appellant is also distinguishable, not only because it addresses primarily the requirements that must be followed in order for an insured to successfully disclaim liability pursuant to Insurance Law §3420(d), which is an issue 7 A-13