Case Name: Edward M. Normile, on Behalf of Himself and All Others Similarly Situated, Appellant, v. Allstate Insurance Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1982-03-19
Citations: 87 A.D.2d 721
Docket Number: 
Parties: Edward M. Normile, on Behalf of Himself and All Others Similarly Situated, Appellant, v Allstate Insurance Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 87
Pages: 721–724

Head Matter:
Edward M. Normile, on Behalf of Himself and All Others Similarly Situated, Appellant, v Allstate Insurance Company, Respondent.

Opinion:
— Appeal from an order of the Supreme Court at Special Term (Lee, Jr., J.), entered December 17, 1980 in Broome County, which, inter alia, granted in part defendant's motion to dismiss the complaint pursuant to CPLR 3211 (subd [a], par 7) by dismissing so much thereof as seeks class action relief and punitive damages, and denied the motion in all other respects. This controversy involves the interpretation of two key provisions of New York's Cdmprehensive Automobile Insurance Reparations Act (Insurance Law, § 670-678). Plaintiff was injured in September, 1977 in an accident between his motorcycle and an automobile. He had covered medical expenses totaling $34,391 and a total loss of earnings of $16,992. Defendant paid plaintiff's medical expenses and also paid him for his loss of earnings after deducting 20% of the lost earnings and after deducting an amount which plaintiff had received in Social Security disability benefits. When plaintiff sought acknowledgment by defendant that he was entitled to further first-party benefits for additional medical care, his claim was denied on the ground that his maximum basic economic loss of $50,000 had been exhausted and he was no longer entitled to first-party benefits. Plaintiff commenced the present action as a class action seeking a declaration that defendant illegally reduced covered persons' outer limit of $50,000 basic economic loss coverage by taking therefrom the deductions set forth in subdivision 2 of section 671 of the Insurance Law. Plaintiff also sought punitive damages. Special Term, on defendant's motion to dismiss the complaint pursuant to CPLR 3211 (subd [a], par 7), concluded that the reduction of the $50,000 outer limit of basic economic loss by the 20% deduction of lost wages and Social Security disability, payments was proper. The class action aspect of the complaint was dismissed as well as plaintiff's claim for punitive damages. Due to a discrepancy in the amount of payments actually made to plaintiff by defendant, plaintiff's individual complaint was not dismissed. This appeal ensued. The basic question presented is whether the statutory setoffs enumerated in subdivision 2 of section 671 are to be deducted from basic economic loss up to $50,000, as was done by defendant, or whether the setoffs are to be deducted from actual economic loss so that the insurer is liable for a maximum payment of $50,000. Subdivision 1 of section 671 provides that "'Basic economic loss' means, up to fifty thousand dollars per person" for certain expenses incurred and loss of earnings. First-party benefits are defined as "payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less [certain deductions]" (Insurance Law, § 671, subd 2). In order to resolve the present controversy, we must ascertain the legislative intent from the wording of the statute. The statute states that "'Basic economic loss'" includes certain expenses and lost earnings up to $50,000 (Insurance Law, § 671, subd 1). " 'First party benefits' " are defined as payments for basic economic loss less certain setoffs (Insurance Law, § 671, subd 2). A fair reading of the language, in our view, imports a statutory scheme whereby an injured person is entitled to receive first-party benefits equal to his basic economic loss up to $50,000 less the statutory deductions set forth in subdivision 2 of section 671 of the Insurance Law. The statutory language is clear and unambiguous in its limitation of basic economic loss to $50,000. Since a covered person cannot recover for basic economic loss in an action for personal injuries arising out of negligence in the use and operation of a motor vehicle (Insurance Law, § 673, subd 1), the deletion of the $50,000 limitation from the definition of basic economic loss would eliminate the threshold amount indicating at which point the injured party may bring a tort action (see Montgomery v Daniels, 38 NY2d 41). One of the purposes of this insurance legislation is to reduce the cost of automobile insurance and we are of the opinion that our interpretation of the statutory language is consistent with such objective. In addition, an injured party, under certain circumstances, may bring a personal injury action against a third party once his basic economic loss has reached the maximum of $50,000 and, therefore, a reduction in the cost of automobile insurance could result by placing some of the burden elsewhere. Plaintiff seeks to hold the insurance carrier liable for up to $50,000 in coverage without any deductions. In other words, the $50,000 limitation would apply to first-party benefits rather than basic economic loss. If the Legislature had so intended, they could have easily provided that first-party benefits mean payments for basic economic loss, less the deductions, with the benefits payable up to $50,000. We conclude that by placing the limitation in the definition of basic economic loss, the Legislature clearly intended that the limitation apply to basic economic loss. This court's interpretation is bolstered by the fact that it is consistent with the established practice and regulations of the Superintendent of Insurance (see 11 NYCRR 65.2). The Legislature did not attempt to clarify the provision in 1977 (L 1977, ch 892) and we must assume that they were aware of such practice and regulations. In support of his interpretation of the provisions in question, plaintiff relies on Kurcsics v Merchants Mut. Ins. Co. (49 NY2d 451). Kurcsics, however, dealt with a different provision of section 671 of the Insurance Law. It was concluded in Kurcsics that the $1,000 limitation contained in section 671 (subd 1, par [b]) of the Insurance Law was not part and parcel of the definition of lost earnings (Kurcsics v Merchants Mut. Ins. Co., supra, p 458). We are of the opinion that the $50,000 limitation embodied in section 671 of the Insurance Law is clearly an integral part of the definition of basic economic loss. A contrary conclusion, in our view, is illogical and inconsistent with the purpose and intent of the legislation in question. We reject plaintiff's arguments that section 671 of the Insurance Law violates his right to equal protection. In view of our conclusion in this case and considering the present record in its entirety, we also conclude that Special Term properly dismissed the class action aspect of plaintiff's complaint and plaintiff's claim for punitive damages. The order, therefore, should be affirmed. Order affirmed, without costs. Sweeney, J. P., Kane, Casey and Yesawich, Jr., JJ., concur.