In the Matter of State Farm Mutual Automobile Insurance Company, Appellant,v.Patrick Fitzgerald, Respondent.BriefN.Y.February 12, 2015APL-2014-00070 Queens County Clerk’s Index No. 20498/11 Appellate Division, Second Department Docket No. 2012-00577 Court of Appeals STATE OF NEW YORK In the Matter of the Petition of STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner-Appellant, against PATRICK FITZGERALD, Respondent-Respondent. >> >> BRIEF FOR RESPONDENT-RESPONDENT FRANK J. LAINE, P.C. Attorneys for Respondent-Respondent 449 South Oyster Bay Road Plainview, New York 11803 516-937-1010 Of Counsel: Frank Braunstein Date Completed: July 15, 2014 To Be Argued By: Frank Braunstein Time Requested: 30 Minutes i TABLE OF CONTENTS Page TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii PRELIMINARY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 QUESTION PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 STATE FARM'S ARGUMENT IS REPLETE WITH FALSE PREMISES DESIGNED TO AVOID THE REALITY THAT ABSENT A SPECIFIC PROVISION TO THE CONTRARY THE TERM "MOTOR VEHICLE" CLEARLY ENCOMPASSES POLICE VEHICLES AND THAT INSURANCE LAW § 3420 CONTAINS NO EXCLUSION FOR POLICE VEHICLES . . . . . . . . . . . . . . . . . . . . . . . .6 A. The Legislature Knows How to Exclude Police Vehicles from the General and Common Definition of the Term Motor Vehicle and Did Not Incorporate Such an Exclusion Within Insurance Law § 3420(f) . . . . . . . . . . . . . . . . . . . . .7 B. The Legislature Specifically Distinguished the Unqualified Term “Motor Vehicle” from the Phrase “Any Vehicle as Defined in Section Three Hundred Eighty-eight of the Vehicle and Traffic Law” Within the Text of Insurance Law § 3420 Making it Clear That the Legislature Considered a “Motor Vehicle” to Be Quite Different from “Any Vehicle as Defined in Section Three Hundred Eighty-eight of the Vehicle and Traffic Law” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 ii C. Insurance Law § 3420(e) Never Defined a Motor Vehicle as a Motor Vehicle as Defined in VTL § 388 Nor Did this Court Ever Hold Otherwise . . . . . . . . . . . . . . . . . .11 D. An Artificial Exclusion of Police Vehicles from the Term “Motor Vehicle” Does Not Cohere with Any Statutory Scheme Relevant to Uninsured Motorist Coverage and Would Only Serve to Frustrate the Statutory Purpose of Insurance Law § 3420(f) . . . . . . . . . . . . . . 15 E. Vehicle and Traffic Law § 125 Defines the Term “Motor Vehicle” as Used in the Uninsured Motorist Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . . . .20 F. State Farm Misconstrues the Holding in State Farm v. Amato and Fails to Take into Account the Legislative Changes That Have Taken Place Since Amato Was Decided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 G. The Artificial Restriction to the Definition of “Motor Vehicle” Sought by State Farm Violates Fundamental Principles of Insurance Contract Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 iii TABLE OF CASES AND AUTHORITIES Page(s) Allstate Ins. Co. v. Shaw, 52 N.Y.2d 818, 436 N.Y.S.2d 873 (1980). . . . . . . . . . . . . . . . . . . . . 1, 18, 19 Cohen v. Chubb Indem. Ins. Co., 286 A.D.2d 264, 729 N.Y.S.2d 105 (1st Dep’t 2001). . . . . . . . . . . . . . . . . . 15 Cragg v. Allstate Indem. Corp., 17 N.Y.3d 118, 926 N.Y.S.2d 867(2011). . . . . . . . . . . . . . . . . . . . . . . . .1, 24 Dandomar Co., LLC v. Town of Pleasant Valley Town Bd., 86 A.D.3d 83, 924 N.Y.S.2d 499 (2nd Dep’t 2011). . . . . . . . . . . . . . . . . . . .25 Eveready Ins. Co. v. Asante, 153 A.D.2d 890, 545 N.Y.S.2d 588 (2nd Dep’t 1989). . . . . . . . . . . . . . . . . .15 Harper v. Lumbermens Mut. Cas. Co., 174 A.D.2d 1031, 572 N.Y.S.2d 195 (4th Dep’t 1991). . . . . . . . . . . . . . . . .21 Liberty Mut. Fire Ins. Co. v. Rondina, 32 A.D.3d 1230, 821 N.Y.S.2d 325 (2nd Dep’t 2006). . . . . . . . . . . . . . . . . .21 Matter of Askey v. General Acc. Fire & Life Assur. Corp., 30 A.D.2d 632, 290 N.Y.S.2d 759, affd. 24 N.Y.2d 937, 302 N.Y.S.2d 576 (1969). . . . . . . . . . . . . . . . . . . 21, 22 Matter of Branford House v. Michetti, 81 N.Y.2d 681, 688, 603 N.Y.S.2d 290 (1993). . . . . . . . . . . . . . . . . . . . . . 25 Matter of Country-Wide Ins. Co. v Wagoner, 45 N.Y.2d 581, 412 N.Y.S.2d 106 (1978). . . . . . . . . . . . . . . . . 18, 19, 21, 22 Matter of Knickerbocker Ins. Co., 22 N.Y.2d 554, 293 N.Y.S.2d 538 (1968). . . . . . . . . . . . . . . . . . . . . . . . . . 15 iv Matter of Liberty Mut. Ins. Co. (Hogan), 82 N.Y.2d 57, 603 N.Y.S.2d 409 (1993). . . . . . . . . . . . . . . . 3, 6, 7, 9, 11, 19 Progressive Northeastern Ins. Co. v. Scalamandre, 51 A.D.3d 932, 858 N.Y.S.2d 327 (2nd Dep’t 2008). . . . . . . . . . . . . . . .20, 21 Rosado v. Eveready Ins. Co., 34 N.Y.2d 43, 49, 356 N.Y.S.2d 8 (1974). . . . . . . . . . . . . . . . . . . . . . . . . 1, 3 State Farm Mut. Auto. Ins. Co. v. Amato, 72 N.Y.2d 288, 532 N.Y.S.2d 239 (1988). . . . . . . . . 4, 10, 12, 15, 16, 23, 24 Insurance law § 3420 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6, 7, 8, 9 10, 14, 16, 17 Insurance Law § 3420(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 11, 12, 14, 15, 16 Insurance Law § 3420(f). . . . . . . . . . . . . . . . . . . . . . . . 5, 6 , 7 , 8, 11 12, 15, 16, 17 Insurance Law § 5102(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Insurance Law § 5202. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 21, 25 Statutes § 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26 Statutes § 231. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Statutes § 236 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Vehicle & Traffic Law § 125 . . . . . . . . . . . . . . . . . . . . .2, 3, 4, 9, 13, 20, 21, 22, 25 Vehicle & Traffic Law § 311. . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 14, 16, 17, 25, 26 Vehicle & Traffic Law § 359. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9, 25, 26 Vehicle & Traffic Law § 388. . . . . . . . 4, 8, 9, 11, 12, 13, 14, 15, 16, 17, 24, 25, 26 11 N.Y.C.R.R. 60-2.3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 PRELIMINARY STATEMENT Forty years ago this Court made clear that once an insurance company issues a liability insurance policy, its obligation, with the exception of permitted exclusions, arises by operation of law and is as broad as the requirements of the applicable statutes. If an attempted exclusion is not permitted by law, the insurer's liability under the policy cannot be limited. Rosado v. Eveready Ins. Co., 34 N.Y.2d 43, 49, 356 N.Y.S.2d 8 (1974). Nearly a quarter of a century ago, this Court declared: “Because of the strong policy concerns which brought them into existence, the interpretation of statutes relating to uninsured motorist coverage must not be caught up in narrow and technical analysis. Instead, the provisions must be interpreted as a whole, giving the words a meaning which serves rather than defeats the over-all legislative goal.” Allstate Ins. Co. v. Shaw, 52 N.Y.2d 818, 436 N.Y.S.2d 873 (1980) More recently, in Cragg v. Allstate Indem. Corp.,17 N.Y.3d 118, 926 N.Y.S.2d 867(2011), this Court again made clear that insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured. This Court further made clear that exclusions or exceptions from policy coverage are not to be extended by interpretation or implication, but are to be 2 accorded a strict and narrow construction. Before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation. Against this framework, an insurer, State Farm, now asks this Court to hold that there is simply no reasonable interpretation of the term “motor vehicle” which includes police vehicles. State Farm makes this request while recognizing that whenever the Legislature has enacted a statute which excludes police vehicles from the common definition of “motor vehicle” as contained within Vehicle & Traffic Law § 125, it has always made the exclusion very clear. State Farm’s argument is belied by the many statutory definitions of the term “motor vehicle” incorporating the Vehicle and Traffic Law § 125 definition with specific exclusions, including exclusions for police vehicles. The legislature has long since recognized that it must specifically exclude police vehicles from a given definition of “motor vehicle” when it wishes to make such an exclusion. The fact that the legislature crafted the Vehicle and Traffic Law and the Insurance Law in order to relieve municipalities from the burdens of obtaining liability insurance on police vehicles and from providing uninsured motorist coverage to the occupants of those vehicles does not inure to the benefit of private 3 insurers issuing liability insurance policies within the State. To allow State Farm to escape liability here is to allow the insurer to be “unjustly enriched to the detriment of the public, which eventually bears the burden through MVAIC”. Matter of Liberty Mut. Ins. Co. (Hogan), 82 N.Y.2d 57, 603 N.Y.S.2d 409 (1993) quoting Rosado v. Eveready Ins. Co., 34 N.Y.2d 43, 49, 356 N.Y.S.2d 8. STATEMENT OF THE CASE On January 2, 2011, respondent, Patrick Fitzgerald, a New York City police officer, was injured in a motor vehicle accident while a passenger in a police vehicle operated by State Farm’s insured, Michael Knauss, which collided with an underinsured motor vehicle. Fitzgerald filed a demand for underinsured motorist arbitration with State Farm after having received the insurer’s written consent to settle his personal injury claim with the underinsured motorist. On or about August 31, 2011, State Farm filed a petition to stay arbitration claiming that Fitzgerald was not entitled to proceed to arbitration because: (1) Fitzgerald did not qualify as an insured under the policy; (2) police cars are excluded from the statutory definition of “motor vehicle” contained within Vehicle & Traffic Law § 125 and (3) that Fitzgerald did not request State Farm’s written consent to settle with the tortfeasor. 4 Fitzgerald opposed the petition asserting that he was an “insured” as defined in the policy issued by State Farm. Fitzgerald further argued that police vehicles are not excluded from the definition of the term “motor vehicle” as it is used in the uninsured motorist endorsement. Finally, Fitzgerald documented that he had requested, and received, State Farm’s written consent to settle with the underinsured motorist. The motion court rejected State Farm’s contention that Fitzgerald had not received the insurer’s consent to settle with the underinsured motorist. However, the motion court erroneously determined that Fitzgerald was not an insured under the uninsured motorist endorsement issued by State Farm because police vehicles are excluded from the term “motor vehicle” as defined in Vehicle & Traffic Law § 388. Fitzgerald appealed to the Appellate Division, Second Department which in accord with all appellate precedent, held that Vehicle & Traffic Law § 125 provides the definition of the term “motor vehicle” as used in the uninsured motorist endorsement. The Appellate Division further held that the motion Court had misconstrued this Court’s holding in State Farm Mut. Auto. Ins. Co. v. Amato, 72 N.Y.2d 288, 532 N.Y.S.2d 239 (1988) as Amato only determined that self insured 5 municipalities are exempt from providing liability insurance on police vehicles and are therefore exempt from complying with the requirement of liability insurance policies to also provide uninsured motorist coverage to occupants of police vehicles. This Court granted State Farm’s applications for leave to appeal and for a stay of the Appellate Division’s order. QUESTION PRESENTED Whether an exclusion that cannot be found within the text of an uninsured motorist endorsement, or within the text of Insurance Law 3420(f), should be incorporated within the definition of the term “motor vehicle” as used within the uninsured motorist endorsement. This question should be answered in the negative. 6 ARGUMENT STATE FARM’S ARGUMENT IS REPLETE WITH FALSE PREMISES DESIGNED TO AVOID THE REALITY THAT ABSENT A SPECIFIC PROVISION TO THE CONTRARY THE TERM “MOTOR VEHICLE” CLEARLY ENCOMPASSES POLICE VEHICLES AND THAT INSURANCE LAW § 3420 CONTAINS NO EXCLUSION FOR POLICE VEHICLES State Farm’s brief is crafted in an attempt to address the fact that the text Insurance Law § 3420(f) does not define the term motor vehicle any more than it excludes police vehicles from such a definition. State Farm is constrained to address, though it never mentions, this Court’s decision in Matter of Liberty Mut. Ins. Co. (Hogan), 82 N.Y.2d 57, 603 N.Y.S.2d 409 (1993) holding that insurers cannot limit their liability under the uninsured motorist endorsement by exclusions to coverage not authorized under Insurance Law § 3420(f). In Hogan, this Court rejected the insurer’s attempted enforcement of a livery exclusion it included within its uninsured motorist endorsement. This Court made clear that “when the Legislature and the State want to allow exclusions, they say so. In the absence of an express statutory or regulatory provision permitting such an exclusion, this Court declines to endorse that exclusion.” 7 In this case, the Legislature allowed no exclusions for occupants of police vehicles insured under private insurance policies. The lack of such an exclusion poses an insurmountable obstacle for State Farm to overcome in this case. Moreover, in Hogan, the insurer actually had a policy exclusion, albeit an unenforceable one, to rely upon. In this case, State Farm cannot even point to any purported exclusion in its policy applicable to police vehicles and seems to suggest that its insureds should search the statutes for most restrictive possible definitions of the terms used in their insurance policies. Faced with this insurmountable uphill battle, State Farm resorts to the implementation of false premises and erroneous analysis of the relevant statutory and decisional authority in a futile attempt to create an exclusion in both a statute and an insurance policy that simply does not exist. A. The Legislature Knows How to Exclude Police Vehicles from the General and Common Definition of the Term Motor Vehicle and Did Not Incorporate Such an Exclusion Within Insurance Law § 3420(f) State Farm’s first false premise is set forth within the subheading of its argument on page 9 of its brief and claims that the text of Insurance Law § 3420(f) excludes “Motor Vehicle” from the definition of police vehicles. In reality, however, neither Insurance Law § 3420(f), nor any other subdivision of Insurance law § 3420, defines either police vehicles nor motor vehicles. It is 8 therefore more than just a strain to claim that the text of the statute excludes the definition of one term from the other. Insurance Law § 3420(f) mandated that the liability insurance policy State Farm sold to Knauss contained uninsured motorist coverage. The implementing regulation, 11 N.Y.C.R.R. 60-2.3 required that uninsured motorist coverage to extend to passengers in “any” motor vehicle operated by Knauss without any exclusions. Neither Insurance Law § 3420 nor the implementing regulations contain any provision excluding police vehicles from the common definition of motor vehicle. State Farm urges that the Vehicle & Traffic Law § 388 definition of motor vehicle should be read into the Insurance Law § 3420(f) references to motor vehicle. Vehicle & Traffic Law § 388 however does not purport to define the term “motor vehicle” but rather simply defines the term “vehicle”. Moreover, the Vehicle & Traffic Law § 388 definition of the term “vehicle” is expressly limited to “as used in this section”, clearly indicating the Legislature’s intent to restrict the applicability of the Vehicle & Traffic Law § 388(2) definition of the term “vehicle”. Moreover, assuming arguendo that Vehicle & Traffic Law § 388 did define “motor vehicle” and further overlooking the Legislature’s explicit limitation on 9 the application of the definition, it is nevertheless clear that had the Legislature intended to incorporate the Vehicle & Traffic Law § 388 definition of vehicle into Insurance Law § 3420 it simply would have done so. Vehicle & Traffic Law §§ 311 and 359, 388 and Insurance Law § 5202 all define the term “motor vehicle”. Each of these definitions incorporate the Vehicle and Traffic Law § 125 definition of “motor vehicle” and specifically exclude, inter alia, police vehicles. The Legislature clearly knows how to exclude police vehicles when it intends to exclude them. State Farm asks this Court to incorporate an exclusion into a statute and an insurance policy that the legislature most clearly never intended. Moreover, Insurance Law Insurance Law § 3420 primarily sets forth minimum requirements for insurance policies issued in the State. The Legislature would not attempt to include a limitation to the definition of such a commonly used term as “motor vehicle” in this provision of the law without making it clear that it was doing so. “The more logical view is that since the Legislature enacted a compulsory uninsured motorist coverage statutory scheme, any exclusions to that scheme should also be expressly authorized by statute or regulation.” Matter of Liberty Mut. Ins. Co. (Hogan), supra. 10 B. The Legislature Specifically Distinguished the Unqualified Term “Motor Vehicle” from the Phrase “Any Vehicle as Defined in Section Three Hundred Eighty-eight of the Vehicle and Traffic Law” Within the Text of Insurance Law § 3420 Making it Clear That the Legislature Considered a “Motor Vehicle” to Be Quite Different from “Any Vehicle as Defined in Section Three Hundred Eighty-eight of the Vehicle and Traffic Law” State Farm erroneously relies upon the text of Insurance Law § 3420(e) as it existed at the time this Court decided State Farm Mut. Auto. Ins. Co. v. Amato, 72 N.Y.2d 288, 532 N.Y.S.2d 239 (1988), but not as the statute existed at any time relevant to this case. More importantly, Insurance Law § 3420(e), as it currently exists specifically references a “motor vehicle” separately and distinctly from “any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law”. The Legislature was thus keenly aware of the distinction between the unqualified term “motor vehicle”, clearly including police vehicles, and “any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law” which would just as clearly exclude police vehicles. As noted by State Farm in its brief to this Court, Statutes § 236 provides that in the absence of anything in the statute indicating an intention to the contrary, where the same word or phrase is used in different parts of a statute, it will be presumed to be used in the same sense throughout, and the same meaning 11 will be attached to similar expressions in the same or a related statute. Accordingly, having differentiated between the unqualified term “motor vehicle” and the term “any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law” in Insurance Law § 3420(e) it would make no sense for the legislature to have used the unqualified term “motor vehicle” within Insurance Law § 3420(f) when it really meant to refer to “any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law” as State Farm erroneously urges. C. Insurance Law § 3420(e) Never Defined a Motor Vehicle as a Motor Vehicle as Defined in VTL § 388 Nor Did this Court Ever Hold Otherwise In light of this Court’s holding in Matter of Liberty Mut. Ins. Co. (Hogan), supra, State Farm is constrained to claim that notwithstanding the fact that Insurance Law 3420(f) does not define the term “motor vehicle” this Court should hold that it does and that this Court should further hold that this nonexistent definition includes an exclusion for police vehicles. This argument is made by State Farm while copiously avoiding the Insurance Law § 3420(e) distinction between the term “motor vehicle” and "any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law". Ironically, State Farm makes this erroneous argument while simultaneously 12 pointing out that courts may not read into a law any word or provision unless good grounds appear for thinking that the lawmakers intended to include something which they have failed to plainly express. In order for State Farm to reach its erroneous conclusion that Insurance Law § 3420(f) contains both a definition and an exclusion which it plainly does not contain, State Farm proceeds from the false premise that Insurance Law § 3420(e) defines “motor vehicle” as any vehicle defined in Vehicle & Traffic Law § 388 and/or that this Court held that it does in Amato. Of course, Insurance Law § 3420(e) never contained any such definition of the term motor vehicle, nor did this Court ever hold otherwise. Moreover, at all times relevant hereto, Insurance Law § 3420(e) provided, and provides, in its totality as follows: (e) No policy or contract of personal injury liability insurance or of property damage liability insurance, covering liability arising from the ownership, maintenance or operation of any motor vehicle or of any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law, or an aircraft, or any vessel as defined in section forty-eight of the navigation law, shall be issued or delivered in this state to the owner thereof, or shall be issued or delivered by any authorized insurer upon any such vehicle or aircraft or vessel then principally garaged or principally used in this state, unless it contains a provision insuring the named insured against liability for death or injury sustained, or loss or damage occasioned within the coverage of the policy or 13 contract, as a result of negligence in the operation or use of such vehicle, aircraft or vessel, as the case may be, by any person operating or using the same with the permission, express or implied, of the named insured. As set forth above, the Legislature’s specific reference to “any motor vehicle or of any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law” [emphasis added] as two separate and distinct entities speaks volumes about State Farm’s claim that the legislature meant to include the limited Vehicle & Traffic Law § 388 definition of “vehicle” within the broader definition of “motor vehicle”. It is clear that the legislature considered a “motor vehicle” to be as defined in Vehicle & Traffic Law § 125 as this definition forms the basis for virtually every definition of “motor vehicle” contained within both the Vehicle & Traffic Law and the Insurance Law and contains no limitations on its applicability. The Legislature has also made clear that the more limited Vehicle and Traffic Law § 388 definition of the term “vehicle” means something quite different and is of limited applicability. Accordingly, the unqualified term “motor vehicle” as used in Insurance Law § 3420(f) should not be read to mean “any vehicle as defined in section three hundred eighty-eight of the vehicle and traffic law” because as demonstrated in Insurance Law § 3420(e) if the legislature meant to refer to the Vehicle and Traffic 1 Significantly, Vehicle & Traffic Law § 311 no longer refers to Vehicle & Traffic Law § 388 and simply contains its own definition of “motor vehicle” incorporating the Vehicle & Traffic Law § 125 definition and providing, inter alia, an exclusion for police vehicles. 14 Law § 388 definition it simply would have said so. More importantly, New York’s mandatory liability insurance provisions are no longer found in Insurance Law § 3420(e) as they were when Amato was decided. The mandatory liability insurance requirements previously contained within Insurance Law § 3420(e) have been removed from Insurance Law § 3420 and are now contained within § 311 of Article 6 of the Vehicle & Traffic Law further betraying State Farm’s entire argument.1 Moreover, this Court never held in Amato that Insurance Law § 3420(e), as it existed at the time, defined the term “motor vehicle” as any motor vehicle as defined in Vehicle Traffic Law § 388 as State Farm claims. Amato merely pointed out that New York’s compulsory liability insurance provision at the time, Insurance Law § 3420(e), much like Vehicle & Traffic Law § 311 today, exempted police vehicles from New York’s mandatory liability insurance requirements. 15 D. An Artificial Exclusion of Police Vehicles from the Term “Motor Vehicle” Does Not Cohere with Any Statutory Scheme Relevant to Uninsured Motorist Coverage and Would Only Serve to Frustrate the Statutory Purpose of Insurance Law § 3420(f) It is well settled that the liability, no fault, and uninsured motorist portions of a comprehensive automobile insurance policy are discrete and internally complete. See i.e. Matter of Knickerbocker Ins. Co., 22 N.Y.2d 554, 293 N.Y.S.2d 538 (1968); Cohen v. Chubb Indem. Ins. Co., 286 A.D.2d 264, 729 N.Y.S.2d 105 (1st Dep’t 2001); Eveready Ins. Co. v. Asante, 153 A.D.2d 890, 545 N.Y.S.2d 588 (2nd Dep’t 1989). State Farm’s claim that an artificial exclusion should be read into the term “motor vehicle” under New York’s vicarious liability statute defining the term “vehicle” solely for purposes of determining an owner’s liability for the negligence of a permissive user overlooks the distinction between liability, no-fault and uninsured motorist coverage. Vehicle & Traffic Law § 388 addresses vicarious tort liability of a vehicle owner for the actions of its operator. This section of the Vehicle & Traffic Law does not directly address liability insurance coverage, certainly does not address uninsured motorist coverage and no longer provides the definition of vehicles for which liability insurance must be obtained. At the time Amato was decided, Insurance Law § 3420(e) mandated that liability insurance be obtained on vehicles 16 as defined in Vehicle & Traffic Law § 388. Insurance Law § 3420(e), as it existed at the time of Amato, did not define the term “motor vehicle” as urged by State Farm. Amato simply held “that automobile liability insurance need only be issued on a “motor vehicle” as it is ‘defined in section three hundred eighty-eight of the vehicle and traffic law’. In any event, as set forth above, Insurance Law § 3420(e) no longer contains any requirement for the procurement of liability insurance as that requirement is now been removed from Insurance Law § 3420 altogether and is now contained in Vehicle & Traffic Law § 311. Vehicle & Traffic Law § 311(2) provides as follows: The term “motor vehicle” shall be defined as in section one hundred twenty-five of this chapter, except that it shall also include trailers, semi-trailers and tractors other than tractors used exclusively for agricultural purposes, and shall exclude fire and police vehicles, farm equipment, including self-propelled machines used exclusively in growing, harvesting or handling farm produce, tractors used exclusively for agricultural purposes, or for snow plowing other than for hire, and self-propelled caterpillar or crawler-type equipment while being operated on the contract site. The applicability of the Vehicle & Traffic Law § 311definition of “motor vehicle” is expressly limited by the legislature to Article 6 of the Vehicle & Traffic Law pertaining to mandatory liability insurance coverage, a discrete and 17 internally complete provision of the insurance policy. The Legislature could not have made it more clear that it intended the Vehicle & Traffic Law § 311 definition of the term “motor vehicle” to be limited to the requirement of obtaining liability insurance and to have no further applicability. State Farm further erroneously claims that adoption of the Vehicle & Traffic Law § 388 definition of “motor vehicle” furthers the statutory purpose of uninsured motorist coverage to best effectuate the Legislature’s intent. Vehicle & Traffic Law § 388, however, does not purport to define the term “motor vehicle” which is the term used in § 3420(f) involving uninsured motorist coverage and which is also the term the Legislature employed within Insurance Law § 3420 when not expressly referring to vehicles as defined in Vehicle & Traffic Law § 388. Moreover, Vehicle & Traffic Law § 388 is no longer provides the definition for determining when liability insurance must be obtained effectively quashing State Farm’s attempt to link vicarious liability with liability insurance and uninsured motorist coverage. This Court has repeatedly made clear that the Legislature’s intent with respect to uninsured motorist coverage was to make compensation available in all cases in which insured persons suffer automobile accident injuries at the hands of financially irresponsible motorists. 18 State Farm’s reliance on Matter of Country-Wide Ins. Co. v Wagoner, 45 N.Y.2d 581, 412 N.Y.S.2d 106 (1978) is therefore as ironic as it is misplaced. This Court made clear so many years ago in holding that the term “automobile” should be deemed to include a motorcycle because: The purpose of the [uninsured motorist] endorsement was to help effectuate the scheme of compulsory automobile liability insurance that has prevailed in New York State for the past quarter of a century by providing coverage to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists. The aim, to make the prescribed compensation available in all such cases, would appear to call for a policy of inclusion rather than exclusion in determining whom it covers. [citations omitted] Wagoner makes clear that the uninsured motorist endorsement should be read broadly, to bring vehicles and claims within its scope, yet State Farm cites it for precisely the opposite proposition. Moreover, with respect to the statutory scheme and purpose surrounding uninsured motorist coverage in this State, upon which State Farm purports to rely, this Court explained in Allstate Ins. Co. v. Shaw, 52 N.Y.2d 818 (1980) that: “The Legislature has specifically declared its grave concern that motorists who use the public highways be financially responsible to ensure that innocent victims of motor vehicle accidents be recompensed for their injuries and losses.” This 19 Court further explained that “Because of the strong policy concerns which brought them into existence, the interpretation of statutes relating to uninsured motorist coverage must not be caught up in narrow and technical analysis. Instead, the provisions must be interpreted as a whole, giving the words a meaning which serves rather than defeats the over-all legislative goals.” With respect to the statutory scheme and public policy of this State, this Court also made clear in Matter of Liberty Mut. Ins. Co. (Hogan), supra., in which a livery exclusion within an uninsured motorist endorsement was rejected: Second, enforcement of the livery exclusion in the uninsured motorists coverage endorsement of a liability insurance policy would be inconsistent with the strong public policy underlying the compulsory uninsured motor vehicle statutes, “to ensure that innocent victims of motor vehicle accidents be recompensed for their injuries and losses” ( Matter of Allstate Ins. Co. v. Shaw, 52 N.Y.2d 818, 819, 436 N.Y.S.2d 873, 418 N.E.2d 388). The purpose of the compulsory uninsured motor vehicle statutory scheme is to provide coverage “to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists” (Matter of Country–Wide Ins. Co. v. Wagoner, 45 N.Y.2d 581, 586, 412 N.Y.S.2d 106, 384 N.E.2d 653). The aim, to make the prescribed compensation available in all such cases, calls for a policy of inclusion rather than exclusion in determining whom it covers (id.). Enforcement of a “livery exclusion” in an uninsured motor vehicle endorsement would be contrary to the purpose underlying this State's compulsory uninsured motor vehicle statutes and would reduce the scope of coverage required by the statutory mandate. 20 New York’s statutory scheme and strong public policy objectives could not be more clear when it comes to uninsured motorist coverage and they do not support treating police officers any differently than the rest of the public when it comes to their private dealings with their personal insurance carriers. Nor does New York’s statutory scheme or public policy objectives support finding exclusions to uninsured motorist coverage where none exist. Finally, as this Court held in Amato, the occupant of a police vehicle may make a claim against their own uninsured motorist policy. There is simply no policy objective nor principled reason that supports allowing an uninsured motorist claim by the named insured but not by the named insured’s passenger who is insured under the same insurance policy. E. Vehicle and Traffic Law § 125 Defines the Term “Motor Vehicle” as Used in the Uninsured Motorist Endorsement The appellate courts of this state, without any responsive action ever being taken by the Legislature, have consistently held that Vehicle & Traffic Law § 125 provides the definition of the term “motor vehicle” as used in the uninsured motorist endorsement. See, i.e. See Progressive Northeastern Ins. Co. v. 21 Scalamandre, 51 A.D.3d 932, 858 N.Y.S.2d 327 (2nd Dep’t 2008); Liberty Mut. Fire Ins. Co. v. Rondina, 32 A.D.3d 1230, 821 N.Y.S.2d 325 (2nd Dep’t 2006); Harper v. Lumbermens Mut. Cas. Co.174 A.D.2d 1031, 572 N.Y.S.2d 195 (4th Dep’t 1991) citing Insurance Law § 5202[a]; Matter of Country–Wide Ins. Co. v. Wagoner, 45 N.Y.2d 581, 412 N.Y.S.2d 106; Matter of Askey v. General Acc. Fire & Life Assur. Corp., 30 A.D.2d 632, 290 N.Y.S.2d 759, affd. 24 N.Y.2d 937, 302 N.Y.S.2d 576 (1969). The extensive history of these cases also puts the lie to State Farm’s erroneous claim that employing the Vehicle & Traffic Law § 125 definition arbitrarily expands the scope of uninsured motorist coverage as it has been the definition used since 1969. Moreover, the Appellate Division, cited Matter of Progressive Northeastern Ins. Co. v. Scalamandre; Matter of Liberty Mut. Fire Ins. Co. v. Rondina; Insurance Law § 5202[a] and Matter of Country–Wide Ins. Co. v. Wagoner in support of its decision to rely upon the Vehicle & Traffic Law § 125 definition in this case and State Farm has made no argument whatsoever as to why any of these cases are distinguishable from this case or why the rationale applicable to those cases is not applicable to this case. State Farm, also points to no authority contrary to that which is set forth above establishing that Vehicle and Traffic Law § 125 provides the controlling definition for the term “motor vehicle” as used in 22 the uninsured motorist endorsement. This Court has consistently held that the definitions contained within the uninsured motorist endorsement should be construed broadly so as to effectuate the statutory scheme and strong public policy of this State. See i.e. Matter of Country–Wide Ins. Co. v. Wagoner and Matter of Askey v. General Acc. Fire & Life Assur. Corp., supra Accordingly, in Matter of Country–Wide Ins. Co. v. Wagoner, this Court held that a motorcycle was encompassed within the term “automobile”. In this case it would be incongruous to hold that a police vehicle was not a “motor vehicle”. While Vehicle & Traffic Law § 125 does contain an extremely limited exclusion for police vehicles, the exclusion is expressly limited to Title Four of Chapter 71 which pertains only to the registration of motor vehicles. State Farm no longer disputes that the exclusion for police vehicles contained in Vehicle & Traffic Law § 125 is limited to title four which is inapplicable to the issues in this case. Accordingly, there is no dispute that Vehicle and Traffic Law § 125 includes police vehicles within its definition of “motor vehicle”. 23 F. State Farm Misconstrues the Holding in State Farm v. Amato and Fails to Take into Account the Legislative Changes That Have Taken Place Since Amato Was Decided In Amato, this Court reversed two decisions which had stayed arbitrations sought by New York City Police Officers injured in motor vehicle accidents with uninsured motorists while operating vehicles owned by the New York City Police Department. As properly explained by the Appellate Division in this case, the issue in Amato was whether the self insured municipality, or State Farm, as the police officers’ private insurer, was required to provide uninsured motorist coverage to the occupants of the police vehicles. Since owners of police vehicles are exempt from obtaining liability insurance policies and because the requirement to provide uninsured motorist coverage is contained within the mandated contents of liability insurance policies, this Court determined that self insured municipalities are not required to provide uninsured motorist coverage to the occupants of police vehicles. Amato did not interpret the terms of any insurance policy, nor were the terms of any insurance policies even mentioned in the decision. Moreover, while municipalities are still exempt from having to obtain liability insurance on police vehicles, and therefore still need not provide uninsured motorist coverage to the 24 occupants of police vehicles, the statutory framework has changed in the years since Amato was decided. The changes in the statutory framework in the years since Amato was decided, which State Farm chose not to address in its brief to this Court, only serve to highlight the fact that the Vehicle & Traffic Law § 388 definition of “vehicle” has limited application and is quite separate and distinct from the term “motor vehicle” which clearly includes police vehicles. G. The Artificial Restriction to the Definition of “Motor Vehicle” Sought by State Farm Violates Fundamental Principles of Insurance Contract Interpretation As explained in Cragg v. Allstate, 17 N.Y.3d 118, 926 N.Y.S.2d 867(2011): Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured. To the extent that there is any ambiguity in an exclusionary clause, we construe the provision in favor of the insured. Moreover, “ ‘exclusions or exceptions from policy coverage ... are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction. Indeed, before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemptions apply in the particular case, and that they are subject to no other reasonable interpretation’ ” It cannot be said that the term “motor vehicle” can be subject to no other 25 interpretation other than excluding police vehicles. Police vehicles are clearly not excluded from the definitions of “motor vehicle” contained in Vehicle & Traffic Law § 125 nor are they excluded form the definition contained in Insurance Law § 5102(f). Moreover, whenever police vehicles are excluded from a statutory definition of the term “motor vehicle” the exclusion is made clearly because such an exclusion is not consistent with common speech or reasonable expectations. That is, most people, and the average insured, would certainly consider a police car to be a motor vehicle. Vehicle & Traffic Law §§ 311 and 359, 388 and Insurance Law § 5202 all contain definitions for the term “motor vehicle”. Each of these definitions of “motor vehicle” specifically incorporate the Vehicle & Traffic Law § 125 definition and specifically exclude, inter alia, police vehicles from their own specific definitions. It is well settled that construction rendering statutory language superfluous is to be avoided. See Statutes §§ 98 and 231. See also Dandomar Co., LLC v. Town of Pleasant Valley Town Bd., 86 A.D.3d 83, 924 N.Y.S.2d 499 (2nd Dep’t 2011); Matter of Branford House v. Michetti, 81 N.Y.2d 681, 688, 603 N.Y.S.2d 290 (1993). The exclusionary language pertaining to police vehicles in Vehicle & Traffic Law §§ 311, 359 and 388 and Insurance Law § 5202 would all be superfluous if Vehicle & Traffic Law § 125 already excluded police vehicles for purposes other than 26 vehicle registration requirements. More importantly, the exclusionary language contained within Vehicle & Traffic Law §§ 311 and 359, 388 and Insurance Law § 5202 would all be superfluous if the typical New Yorker would be thought to believe that the term motor vehicle unquestionably excludes police cars. Finally, the uninsured motorist endorsement issued by State Farm defined an insured as “any other person while occupying. . . any motor vehicle while being operated by [the named insured]”. The reference to “any” motor vehicle certainly supports a broad interpretation of the term “motor vehicle” as used within the endorsement and not an interpretation that artificially eliminates police vehicles. 27 CONCLUSION For all of the foregoing reasons, and the reasons set forth before the Appellate Division, it is respectfully submitted that this Court should affirm the Order of the Appellate Division, deny the petition in its entirety and to finally allow the respondent to proceed to the arbitration to which he is entitled. Dated: Plainview, New York July 15, 2014 Respectfully submitted, ____________________ Frank Braunstein FRANK J. LAINE, P.C. Attorneys for Respondent-Respondent 449 S. Oyster Bay Road Plainview, New York 11803 (516) 937-1010 Of Counsel: Frank Braunstein
