| Lewiarz v Travco Ins. Co. |
| 2011 NY Slip Op 02094 [82 AD3d 1464] |
| March 24, 2011 |
| Appellate Division, Third Department |
| Peter Lewiarz, Also Known as Piotr Lewiarz, Also Known as PeterLawiarz, et al., Respondents, v Travco Insurance Company, Also Known as Traveler's Insurance,et al., Defendants, and Sils Brokerage Corporation et al., Appellants. |
—[*1] Corrigan, McCoy & Bush, P.L.L.C., Rensselaer (Scott W. Bush of counsel), for KarenKenney, appellant. James F. Keefe, Cairo (Nicholas E. Tishler, Niskayuna, of counsel), forrespondents.
Stein, J. Appeal from an order of the Supreme Court (Devine, J.), entered January 11, 2010in Schoharie County, which denied a motion by defendants Sils Brokerage Corporation andKaren [*2]Kenney for summary judgment dismissing thecomplaint against them.
Plaintiffs, who are husband and wife, owned a home that was destroyed by fire in July 2001.At that time, the home was insured by defendant Travco Insurance Company (hereinafterTravelers), which paid plaintiffs' claim, but thereafter gave plaintiffs notice that it would notrenew their homeowner's insurance policy when it expired in August 2002. Plaintiffssubsequently rebuilt the home. In June 2003, after having been unsuccessful for an extendedperiod of time in obtaining insurance for the rebuilt home, plaintiff Peter Lewiarz (hereinafterplaintiff) called defendant Karen Kenney, with whom he claims to have conducted priorbusiness, to see if she could assist him. Although a number of facts are in dispute, it isuncontroverted that plaintiff spoke to Kenney over the telephone and gave her information abouthis insurance needs; Kenney then relayed the information to defendant Sils BrokerageCorporation, which submitted an application to Travelers for a homeowner's insurance policy onplaintiff's behalf. Travelers issued a new homeowner's insurance policy to plaintiff, effectiveJune 11, 2003. On September 29, 2006, plaintiffs' rebuilt residence was destroyed by a fire. InJuly 2007, Travelers rejected plaintiff's claim against the insurance policy on the ground that thepolicy was void ab initio because, among other things, plaintiff had concealed in his applicationthe fact that he had previously suffered a fire loss at his residence.[FN1]
In December 2007, plaintiffs commenced this action alleging that Sils and Kenney(hereinafter collectively referred to as defendants) were negligent in preparing the application toTravelers for insurance coverage. Following substantial discovery, defendants moved forsummary judgment dismissing the complaint on the grounds that the claim is barred by thestatute of limitations, Sils is not vicariously liable for the actions of Kenney because she was notemployed by Sils at the time the insurance application was made, there is no privity between Silsand plaintiffs, and Kenney is not individually liable to plaintiffs because she acted solely in thecourse of her employment with Dolores Buonocore Agency (hereinafter Buonocore). SupremeCourt's denial of their motion prompted this appeal by defendants.
Preliminarily, we conclude that Supreme Court properly entertained defendants' statute oflimitations argument set forth for the first time in their motion for summary judgment. Plaintiffscorrectly note that defendants had neither raised the statute of limitations defense in their answernor moved to dismiss the complaint on that ground pursuant to CPLR 3211 (a) prior to theirsummary judgment motion. However, " 'the waiver that would otherwise have resulted [*3]from [the failure to plead the defense or move to dismiss thecomplaint premised on such defense] was retracted by assertion of the defense in connection withthe summary judgment motion[ ]' " (Allen v Matthews, 266 AD2d 782, 784 [1999],quoting Adsit v Quantum Chem. Corp., 199 AD2d 899, 900 [1993] [citation omitted]; see Sullivan v American Airlines, Inc.,80 AD3d 600, 602 [2011]).
We must, therefore, determine the propriety of Supreme Court's holding that plaintiffs'negligence action accrued on the date their claim was rejected by Travelers—resulting intimely commencement of this action—as opposed to the date the policy was issued, asdefendants argue, which would render the action time-barred. "The [s]tatute of [l]imitations doesnot run until there is a legal right to relief. Stated another way, accrual occurs when the claimbecomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint"(Kronos, Inc. v AVX Corp., 81 NY2d 90, 94 [1993] [citation omitted]). Inasmuch as"[d]amages are a necessary element of a negligence claim which must be pleaded and proven"(Siler v Lutheran Social Servs. of Metro.N.Y., 10 AD3d 646, 648 [2004]), plaintiffs could not have established any harm untiltheir claim was denied by Travelers. Thus, where, as here, a claim against an insurance agent orbroker relating to the failure of insurance coverage sounds in tort, the injury occurred and theplaintiffs were damaged when coverage was denied (see Bond v Progressive Ins. Co.,82 AD3d 1318, 1320-1321 [2011]; see also Venditti v Liberty Mut. Ins.Co., 6 AD3d 961, 962 [2004]; compare Lieberthal v Agency Ins. Brokers, 216AD2d 816, 817 [1995]). Accordingly, Supreme Court properly determined that plaintiffs' actionwas timely.
Turning to the merits, as the movants for summary judgment, defendants bore the initialburden of "mak[ing] a prima facie showing of entitlement to judgment as a matter of law"(Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). In support of their motion,defendants submitted four affidavits which alleged, among other things, that on June 5, 2003,plaintiff called Buonocore, a corporation solely owned and operated by Dolores Buonocore, fromwhom plaintiff had previously procured insurance. Although Buonocore was primarily devotedto real estate, it would occasionally obtain insurance for customers by submitting theirinformation to other insurance agencies, including Sils, who would obtain quotes from carriersand procure the insurance policy, with Buonocore receiving a share of the commissions paid onthe policy and any subsequent renewals. Buonocore permitted Kenney, an independent licencedreal estate agent, to use office space for her real estate activities, in exchange for which sheperformed "basic secretarial/clerical office work." Buonocore's owner instructed Kenney how toperform certain tasks, including how to take basic information if someone called looking for aninsurance policy. When plaintiff called Buonocore in June 2003, Kenney handled the call. Aftertaking information from plaintiff, Kenney allegedly faxed her notes to Margaret Lamonaca, theoffice manager at Sils. Lamonaca subsequently called Kenney with a quote for plaintiff fromTravelers, which Kenney relayed to plaintiff. When plaintiff indicated that he wished to purchasethe policy, Kenney provided Sils with "basic information" for the policy. Sils thereaftersubmitted the information and an application to Travelers, which issued the policy to plaintiff.[*4]
According to the affidavits of Lamonaca and Sils' owner,Sils relied solely on the information provided by Kenney and Buonocore in procuring the subjectpolicy. The affidavits of Lamonaca, Dolores Buonocore and Kenney further indicated that Silsassumed Buonocore's insurance portfolio in late July 2003 and that Kenney was hired as anemployee of Sils in September 2003. However, Kenney was allegedly not employed by Sils at thetime the insurance policy was issued to plaintiff. This evidence was sufficient to meet Sils' initialburden of establishing that no employment relationship existed between Kenney and Sils at thetime plaintiff's insurance policy was procured (see Cietek v Bountiful Bread of Stuyvesant Plaza, Inc., 74 AD3d1628, 1629 [2010]) and, therefore, that no privity existed between plaintiff and Sils.Accordingly, the burden shifted to plaintiffs to raise a triable question of fact as to Sils' liability(see CPLR 3212 [b]; Zuckerman v City of New York, 49 NY2d 557, 560 [1980];Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]).
In his deposition testimony, plaintiff first indicated his belief that he had initially calledKenney at Buonocore, but then testified that he was not certain whether he spoke to Kenney ather old location at Buonocore or at her "new location" with Sils. However, in his affidavitopposing the motion for summary judgment, plaintiff alleged unequivocally that, when he calledKenney, he "was informed that she had moved to a new business and was given a telephonenumber to call her at Sils." This evidence creates a classic question of credibility—to beresolved by a trier of fact—as to whether Kenney was employed by Sils or, at the veryleast, whether a principal-agent relationship existed between Kenney and Sils at the time theinsurance policy was procured, such that Sils may be vicariously liable for Kenney's actions(see e.g. Pyramid Champlain Co. v Brosseau & Co., 267 AD2d 539, 544 [1999], lvdenied 94 NY2d 760 [2000]; seealso Fils-Aime v Ryder TRS, Inc., 40 AD3d 917, 917-918 [2007]).[FN2]
Turning to the denial of Kenney's motion for summary judgment, Supreme Court held, inpart, that "material issues of fact remain in relation to whether . . . Kenney and Silsfailed to exercise due care in handling plaintiffs' insurance transaction." With respect to Kenney,the complaint alleges that she was negligent in taking down information pertaining to plaintiff'sapplication and in submitting that information to Sils. The affidavits of Kenney and DoloresBuonocore allege that Buonocore instructed Kenney on what information to elicit forhomeowner's insurance applications and to then contact various brokers to obtain quotes. If [*5]proven, the evidence establishes, at a minimum, the existence of aprincipal-agent relationship between Buonocore and Kenney (see Fils-Aime v Ryder TRS,Inc., 40 AD3d at 918). Inasmuch as the tasks of obtaining information from plaintiff andsubmitting such information to Sils were within the scope of Kenney'semployment/principal-agent relationship with either Buonocore or—as asserted byplaintiffs—with Sils, she cannot be held personally liable therefor (see Ali v Pacheco, 19 AD3d 439,440 [2005]). Thus, Kenney's motion for summary judgment should have been granted.
The parties' remaining contentions have been considered and, to the extent they are properlybefore us, are either academic or without merit.
Peters, J.P., Kavanagh, Garry and Egan Jr., JJ., concur. Ordered that the order is modified, onthe law, without costs, by reversing so much thereof as denied defendant Karen Kenney's motionfor summary judgment; motion granted to that extent and complaint dismissed against saiddefendant; and, as so modified, affirmed.
Footnote 1: Travelers also relies onadditional errors and/or misrepresentations in the application which it claims were misleading,including, among others, the misspelling of plaintiff's surname, the omission of his wife's namefrom the policy, a change in the street address of the property since plaintiffs' previous coverageas a result of a new 911 numbering system and the location of a fire hydrant.
Footnote 2: Notably, plaintiffs argue thattheir claim against Sils is not based on a theory of vicarious liability but, rather, upon Sils' directnegligence in handling the insurance application. Regardless of whether there is an issue of factas to Sils' relationship with Kenney, issues of fact clearly exist as to whether Sils was negligentin relying on the information provided by Kenney in submitting the insurance application toTravelers, providing an alternative ground for the denial of summary judgment to Sils.