Court Opinion

ID: 5767818
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:26:23.711387+00
Date Added: 2024-06-11T08:41:42.107994
License: Public Domain

*372In an action pursuant to Insurance Law § 3420 (a) (2) to recover an unsatisfied judgment against the defendant’s insured, the defendant appeals from (1) so much of an order of the Supreme Court, Kings County (Schmidt, J.), dated January 3, 2006, as denied its motion pursuant to CPLR 3124 and 3126 to compel certain discovery or, in the alternative, to preclude the plaintiff from adducing certain evidence at trial, (2) an order of the same court dated March 2, 2006, which granted the plaintiffs motion for summary judgment on the complaint and, in effect, denied its cross motion for summary judgment dismissing the complaint, and (3) a judgment of the same court dated April 14, 2006, which, upon the order dated March 2, 2006, is in favor of the plaintiff and against it in the principal sum of $800,000.
Ordered that the appeals from the orders dated January 3, 2006 and March 2, 2006 are dismissed, without costs or disbursements; and it is further,
Ordered that the judgment is modified, on the law, by deleting the provision thereof which is in favor of the plaintiff and against the defendant in the principal sum of $800,000, and substituting therefor a provision which is in favor of the plaintiff and against the defendant in the principal sum of $25,000; as so modified, the judgment is affirmed, without costs or disbursements, and the matter is remitted to the Supreme Court, Kings County, for the entry of an appropriate amended judgment.
The appeals from the intermediate orders must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248 [1976]). The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501 [a] [1]).
On January 16, 2000 the plaintiff, while driving her own vehicle, was struck and injured by a vehicle (hereinafter the Fashina vehicle) operated by Olatoyin Fashina and owned by Olatoyin Fashina, Inc. (hereinafter together the Fashinas). The plaintiff demanded an uninsured motorist arbitration against her own insurer, but that insurer petitioned to stay the arbitration on the ground that the Fashinas and the Fashina vehicle were *373insured by the defendant, Hanover Insurance Company (hereinafter Hanover). The petition relied upon the facts that the police accident report pertaining to the collision listed an insurance code corresponding to Hanover as the insurer of the Fashina vehicle, and that an “Accident Information Exchange Report” also identified Hanover as the insurer. Hanover was joined as a named respondent in the proceeding to stay arbitration and was duly served with the notice of petition and petition, but failed to appear or answer. Accordingly, in an order dated November 8, 2002, entered upon Hanover’s default, the Supreme Court, Kings County (Dabiri, J.) permanently stayed the arbitration, finding in part that, “based on the evidence submitted to the Court, the vehicle operated by Olatoyin M. Fashina and owned by Olatoyin Fashina, Inc. was insured by [Hanover].”
Thereafter, Hanover moved to vacate the order entered upon its default, claiming, inter alia, that it never insured the Fashinas or the Fashina vehicle. In an order dated July 9, 2003, the court granted the motion, vacated the default, and referred the matter to a Judicial Hearing Officer to determine the issue of coverage. However, on the appeal by the plaintiffs insurer, this Court, in a decision and order dated June 7, 2004, reversed the order dated July 9, 2003 and reinstated the order dated November 8, 2002 entered on Hanover’s default, finding that Hanover “failed to demonstrate a reasonable excuse for its default” (Matter of Hartford Ins. Co. of Midwest v Creinis, 8 AD3d 381 [2004]).
Meanwhile, by the filing of a summons and complaint on December 30, 2002 the plaintiff commenced an action to recover damages for her personal injuries against the Fashinas. Notwithstanding letters sent by the plaintiffs counsel to the attorneys representing Hanover on the appeal from the order dated July 9, 2003, Hanover did not provide legal counsel to defend the Fashinas, who failed to appear in the action. Accordingly, the plaintiff moved for leave to enter a default judgment on the issue of liability against the individual operator Olatoyin Fashina. In an order dated June 25, 2004, the Supreme Court, Kings County (M. Garson, J.), granted the motion, and an inquest to assess damages was scheduled for October 28, 2004. The inquest did not take place until February 22, 2005, well after this Court reinstated the order dated November 8, 2002, which both stayed arbitration and determined that Hanover was the insurer of the Fashina vehicle. Nevertheless, and notwithstanding the provision of notice of the inquest to Hanover, once again no one appeared on behalf of Olatoyin *374Fashina, who again defaulted. The inquest culminated in a judgment dated May 13, 2005 in favor of the plaintiff and against Olatoyin Fashina in the principal sum of $800,000. The judgment with notice of entry was served upon Hanover, but was not paid.
On or about July 12, 2005 the plaintiff commenced this action pursuant to Insurance Law § 3420 (a) (2) against Hanover to recover the amount of the unsatisfied judgment. Hanover answered the complaint and asserted, as an affirmative defense, inter alia, that it never issued a policy of insurance to the Fashinas. Following some preliminary motion practice, the plaintiff moved for summary judgment on the complaint and Hanover cross-moved for summary judgment dismissing the complaint. The Supreme Court, Kings County (Schmidt, J.), granted the plaintiffs motion in an order dated March 2, 2006. A judgment dated April 14, 2006, in the principal sum of $800,000 was entered in favor of the plaintiff and against Hanover, and Hanover appeals.
Contrary to Hanover’s contention, the Supreme Court properly imposed liability against it. “Insurance Law § 3420 grants an injured plaintiff the right to sue a tortfeasor’s insurance company to satisfy a judgment obtained against the tortfeasor” (Lang v Hanover Ins. Co., 3 NY3d 350, 352 [2004]). The action may be maintained following a 30-day waiting period after service upon the insurer of the judgment with notice of entry, assuming the insurer does not satisfy the judgment in the interim (see Insurance Law § 3420 [a] [2]). “Once the statutory prerequisites are met, the injured party steps into the shoes of the tortfeasor and can assert any right of the tortfeasor-insured against the insurance company” (Lang v Hanover Ins. Co., 3 NY3d at 355).
Here, the plaintiff made a prima facie showing of entitlement to judgment as a matter of law under Insurance Law § 3420 (a) (2) (see generally Alvarez v Prospect Hosp., 68 NY2d 320 [1986]). Certainly she proved the existence of an unsatisfied judgment in her favor in the underlying action to recover damages for personal injuries (see Lang v Hanover Ins. Co., 3 NY3d 350 [2004]). However, Hanover contends that it never issued a policy to Olatoyin Fashina, Inc., and never covered the vehicle which struck the plaintiff. Therefore, Hanover reasons that the plaintiff is barred from any recovery because she cannot make the requisite showing that, “at the time of the accident, there was in full force and effect an agreement of insurance between the insurer and the judgment debtor covering the latter for the liability merged in the judgment” (Holmes v Allstate Ins. Co., *37533 AD2d 96, 98 [1969]). This contention is unpersuasive, since Hanover’s position has already been rejected by this Court in the factually indistinguishable case of Kleynshvag v GAN Ins. Co. (21 AD3d 999 [2005]).
In Kleynshvag, decided by this Court slightly more than three years ago, the plaintiff was struck and injured, as here, by a vehicle operated by one person and owned by another. As here, the injured party sought uninsured motorist benefits against his own insurer, and that insurer sought to permanently stay the uninsured motorist arbitration on the ground that another carrier, GAN Insurance Company (hereinafter GAN), was the insurer of the offending vehicle. Like Hanover herein, GAN was given notice of the proceeding to stay arbitration and failed to appear. As in this case, the Supreme Court issued an order, upon GAN’s default, staying the arbitration and finding that GAN was the insurer of the subject vehicle and, like Hanover here, GAN unsuccessfully attempted to vacate its default. As here, the injured party commenced a personal injury action against the owner and operator of that vehicle, and GAN, like Hanover, declined to participate despite having notice of the action. As here, the personal injury action culminated in the entry of a default judgment against the vehicle operator, and an inquest to assess damages, at which the operator did not appear, resulted in the entry of a substantial money judgment in favor of the injured party and against the defaulting operator. The injured party then sought to enforce the unsatisfied judgment against GAN pursuant to Insurance Law § 3420 (a) (2). As Hanover did here, GAN contended, in opposition to the injured party’s motion for summary judgment on the complaint, that it did not issue an insurance policy covering the owner or operator of the subject vehicle. As here, the Supreme Court granted the injured party’s motion for summary judgment on the complaint, and the matter was appealed to this Court.
In upholding the imposition of liability against GAN, this Court observed, in an analysis equally applicable to the case at bar, that since the Supreme Court had determined in the proceeding to stay arbitration that GAN insured the offending vehicle, GAN was “collaterally estopped from litigating the issue of coverage, even though that issue was initially determined on its default in the arbitration” (Kleynshvag v GAN Ins. Co., 21 AD3d at 1003). This Court further reasoned that the preclusive effect of that determination satisfied the injured party’s burden of demonstrating his entitlement to summary judgment pursuant to Insurance Law § 3420 (a) (2).
In view of our recent precedent in Kleynshvag, decided under *376facts nearly identical to those at bar, we are compelled to find that the plaintiff has sustained her burden under Insurance Law § 3420 (a) (2) in this case. Hanover was made a party to the proceeding to stay arbitration of the uninsured motorist claim and inexcusably failed to participate in that proceeding. As a result, the Supreme Court determined, upon Hanover’s default, that Hanover extended insurance coverage to the subject vehicle. Accordingly, under the circumstances, Hanover is collaterally estopped from litigating the issue of such coverage at this juncture, since that question was already determined adversely to it in the proceeding to stay arbitration—a proceeding in which it had a full and fair opportunity to appear and litigate—and the application of collateral estoppel is neither unwarranted nor unfair under the facts presented (see Kleynshvag v GAN Ins. Co., 21 AD3d 999 [2005]; see also Matter of Aisle Natl. LLC v K&E Mech., Inc., 29 AD3d 901 [2006]; Chai Props. Corp. v Carb, Luria, Glassner, Cook & Kufeld, 288 AD2d 44 [2001]; Harris v Stein, 207 AD2d 382 [1994]; cf. Gaston v American Tr. Ins. Co., 11 NY3d 866 [2008] [application of collateral estoppel is inappropriate where there are conflicting judgments on the coverage issue at the trial level]).
However, with regard to the issue of the amount to be awarded to the plaintiff, we find that the plaintiffs recovery must be limited to the sum of $25,000, which is the statutory minimum coverage required by Vehicle and Traffic Law § 311 (4) (a). In Kleynshvag, this Court recognized that a situation could arise where an insurer, by reason of a prior default, might be found liable for an unsatisfied judgment pursuant to Insurance Law § 3420 (a) (2), yet might also be able to prove either that it had no policy of insurance in effect covering the subject accident, or that any policy which was in effect had a coverage limit lower than the amount of the unsatisfied judgment. In order to avoid the imposition of an undue financial burden upon the insurer in such a situation, this Court left open the door in Kleynshvag to the receipt of such evidence, not to relieve the defaulting insurer of liability altogether, but to reduce its exposure on the judgment. However, this Court further reasoned that “[s]ince a limitation on an insurer’s liability . . . may frustrate the policy of this State that victims of motor vehicle accidents receive compensation for their injuries, we conclude that [the insurer] carries the burden of proving the limit of the relevant coverage” (Kleynshvag v GAN Ins. Co., 21 AD3d at 1004). Moreover, where an insurer can demonstrate that no coverage at all was in effect for the accident, its exposure will be limited to the statutory minimum coverage for personal injury liability, which is fixed in the sum of $25,000 pursuant to Vehi*377ele and Traffic Law § 311 (4) (a), a relatively paltry price for its default in the proceeding to stay the uninsured motorist arbitration—the very default which occasioned all of the ensuing litigation and the corresponding delay in the injured plaintiff’s monetary recovery.
Unlike the insurer in Kleynshvag, who failed to sustain its burden with regard to the monetary limit of its policy, Hanover has met its burden in this case. Indeed, Hanover came forward with extensive evidence of multiple exhaustive searches of different databases conducted by different Hanover personnel, using both the name of the purported insured and the vehicle identification number of the subject vehicle. Those searches revealed that no policy was issued by Hanover covering the owner, operator, or vehicle involved in this case at the time of the accident. Accordingly, Hanover’s liability should be limited to the amount statutorily fixed as the minimum coverage required for personal injury liability.
The arguments propounded by the dissent are precisely those which were already considered and rejected by this Court in its recent resolution of the Kleynshvag appeal. Accordingly, we find them unpersuasive.
In this regard, the Supreme Court’s finding in the proceeding to stay the uninsured motorist arbitration that the subject vehicle in this case was insured by Hanover necessarily entailed a determination that insurance coverage was afforded to its owner Olatoyin Fashina, Inc. Moreover, it is axiomatic that there is a strong presumption that one who uses a motor vehicle does so with the owner’s permission, thereby resulting in liability for the negligence of the operator unless that presumption is rebutted (see Vehicle and Traffic Law § 388; Murdza v Zimmerman, 99 NY2d 375 [2003]; Murphy v Carnesi, 30 AD3d 570 [2006]). Significantly, that presumption has not been challenged in this case, nor could a realistic challenge to the presumption of permissive use be mounted here, given that the owner of the vehicle was Olatoyin Fashina, Inc., and the operator was Olatoyin Fashina. Since the Insurance Law mandates that automobile liability coverage be extended to permissive users (see Insurance Law § 3420 [e]; Jefferson Ins. Co. of N.Y. v Travelers Indem. Co., 92 NY2d 363, 375 [1998]), the plaintiff was entitled to seek recovery from Hanover for the negligence of the operator.
Furthermore, while the dissent expresses concern that our conclusion creates a “windfall” for the plaintiff’s uninsured motorist carrier by shifting liability for the plaintiffs injuries to Hanover, we are far more concerned that the injured plaintiff have recourse to a viable avenue of recovery. Indeed, the plaintiff *378sought to obtain uninsured motorist benefits from her own carrier in the first instance. However, Hanover foreclosed any possibility that she might obtain such benefits by its inexcusable default in the proceeding to stay arbitration. That default led to a determination that Hanover was the insurer of the Fashina vehicle, and thereby rendered uninsured motorist benefits unavailable to the plaintiff. Were we now to hold that Hanover should not be bound by that determination and instead should be free to contest the issue of whether it provided coverage, then the plaintiff would not be able to obtain uninsured motorist benefits from her own insurer because that arbitration has been permanently stayed as a result of Hanover’s default, and she likewise would be unable to seek recovery from Hanover because it did not have a policy in effect which covered the accident. Such a result would be untenable. As between denying any recovery to the injured and innocent plaintiff or imposing the statutory minimum liability against the inexcusably defaulting Hanover, we have no difficulty in choosing the latter. It was Hanover’s obligation to present evidence of noncoverage in response to the prima facie showing of coverage made in the proceeding to stay the uninsured motorist arbitration. Having instead defaulted, Hanover ran the risk that its default would prevent it from subsequently denying the existence of coverage, a result which has now come to pass. We see no reason under these circumstances to come to Hanover’s rescue at this late stage.
Finally, the Supreme Court providently exercised its discretion in denying Hanover’s motion to compel certain discovery or, in the alternative, to preclude the plaintiff from adducing certain evidence at trial (see D’Ambrosio v 85 Crystal Run Co., 37 AD3d 757 [2007]; Casabona v Huntington Union Free School Dist., 29 AD3d 723 [2006]; Milbrandt & Co., Inc. v Griffin, 19 AD3d 663 [2005]).
Hanover’s remaining contentions are without merit. Mastro, J.E, Santucci and Florio, JJ., concur.