| Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh,Pa. |
| 2007 NY Slip Op 10425 [46 AD3d 1251] |
| December 27, 2007 |
| Appellate Division, Third Department |
| Raymond Corporation et al., Appellants, v National Union FireInsurance Company of Pittsburgh, Pennsylvania, Respondent. |
—[*1] Mitchell, Goris & Stokes, L.L.C., Cazenovia (Joshua Wall of Cozen O'Connor, Philadelphia,Pennsylvania, pro hac vice), for respondent.
Mugglin, J. Appeals (1) from a judgment of the Supreme Court (Dowd, J.), entered June 30,2006 in Chenango County, upon a decision of the court in favor of defendant, and (2) from anorder of said court, entered April 9, 2007, in Chenango County, which, among other things,denied plaintiffs' motion to vacate the judgment.
Plaintiff Raymond Corporation contributed $500,000 and defendant contributed $2.5 milliontoward a $6 million settlement[FN*] of a personal injury accident, stipulating to resolve an insurance coverage issue in subsequentlitigation or arbitration. When that subsequent litigation was previously before us, we reversedSupreme Court's November 5, 2002 order granting summary judgment to defendant and declaredthat the policy at issue covered Raymond's vendor, as an additional insured, only for injuryarising out of defects in Raymond's products (6 AD3d [*2]788[2004]). Our interpretation—that the policy language covered personal injury claimscaused by the vendor's independent acts of negligence—was reversed by the Court ofAppeals (5 NY3d 157 [2005]) and Supreme Court's order was reinstated.
Thereafter, in October 2005, defendant submitted a notice of settlement of judgment andnotice of taxation of costs, including predecision interest. Supreme Court rejected plaintiffs'opposition to the proposed judgment, issuing a "memorandum decision" on June 22, 2006. OnJune 30, 2006, final judgment was entered awarding defendant $2.5 million with predecisioninterest of $895,625 and postdecision interest of $1,118,858.44. Thereafter, plaintiffs moved tovacate the final judgment claiming that the judgment was obtained as a result of defendant'smisconduct during discovery and requesting additional discovery based on newly discoveredevidence. Supreme Court denied plaintiffs' motion to vacate the final judgment. Plaintiffs nowappeal from Supreme Court's "memorandum decision" entered June 22, 2006, the final judgmententered June 30, 2006 and the denial of the motion to vacate the final judgment. The appealswere consolidated by order of this Court.
We first address defendant's assertions that neither the "memorandum decision" nor the finaljudgment entered herein constitute appealable paper and, thus, these appeals should besummarily dismissed (see CPLR 5512 [a]; Matter of Palmer v Palmer, 284 AD2d612, 613 [2001]). An appealable paper is an order or judgment of the court of original instance(see CPLR 5512 [a]; Thorne vGrubman, 14 AD3d 433, 434 [2005]). First, although the document entered June 22,2006 is styled "memorandum decision," the foot of the decision refers to the papers consideredand states "the signing of this decision and order shall not constitute entry or filing under CPLR2220." Although the paper has aspects of an order, since it is not based on a notice of motionseeking specific relief, we conclude that the document does not constitute an appealable order.Second, the final judgment entered in response to the "memorandum decision" is an appealablepaper since it addresses the issue of entitlement to predecision and postdecision interest, aheretofore unlitigated issue.
We next address plaintiffs' appellate arguments that the judgment must be vacated due tonewly discovered evidence (see CPLR 5015 [a] [2]) and because of alleged misconducton the part of defendant (see CPLR 5015 [a] [3]). Although we reject defendant's positionthat plaintiffs should be sanctioned for frivolous conduct as a result of these arguments, wenevertheless find them unpersuasive. Plaintiffs' arguments are premised on their assertion that theCourt of Appeals engaged in an economic justification—that a vendor's endorsement is a"cheap add-on" in denying coverage and, therefore, defendant's destruction of its files containingthe cost of this vendor add-on and plaintiffs' "newly discovered" evidence of the cost of thisadd-on support vacating the judgment. In our view, a fair and balanced reading of the Court ofAppeals decision reveals that it is based on an analysis of the language of the policy, noteconomic principles. Therefore, earlier discovery of the cost of the vendor endorsement toRaymond would have had no impact on the final determination of this issue. Although thisdetermination renders plaintiffs' additional arguments largely irrelevant, we do observe that wefind no abuse of Supreme Court's discretion in denying plaintiffs' motion to vacate the finaljudgment because of defendant's misconduct or because of newly discovered evidence (seeWoodson v Mendon Leasing Corp., 100 NY2d 62, 68 [2003]). In any event, as the relevantinvoices were at all times in Raymond's own files, there is no merit to the argument thatdefendant committed misconduct—i.e., spoliation of evidence—by destroying itscopies of the invoices or that the evidence constitutes newly discovered evidence (see Tibbits v Verizon N.Y., Inc., 40AD3d 1300, 1302 [2007]; People vTucker, 40 AD3d 1213, 1214 [2007], lv denied 9 NY3d 882 [2007];Evergreen Bank v [*3]Dashnaw, 262 AD2d 737, 738[1999]).
We next address plaintiffs' argument that the inclusion of over $2 million in prejudgmentinterest is unsupportable in law and contrary to the parties' stipulation, and defendant's argumentthat this issue is unpreserved for appellate review because plaintiffs served no reply to its answer,which sought $2.5 million plus interest, costs and counsel fees. We reject defendant's contentionthat the issue is unpreserved. Notably, only the wherefore clause of the answer demands interest.There is no separate cause of action pleaded as a counterclaim for interest and, therefore, there isno need for a separate reply pleading. Moreover, the pleadings adequately frame the issuesbetween the parties.
Turning to the merits, we first observe that the stipulation placed on the record is a contract,subject to the principles of contract interpretation. Where the terms are clear and unambiguous,the intent of the parties is to be gleaned solely from the language of the agreement (see Dudick v Gulyas, 4 AD3d 604,606 [2004]; Mayefsky v Mayefsky, 184 AD2d 954, 955 [1992], lv dismissed 80NY2d 924 [1992]). As relevant to this appeal, the stipulation recites: "An agreement that each ofthe insurance carriers and the insureds release any and all claims, including subrogation claims,bad faith claims, punitive damage claims amongst themselves with the exception of. . .: Number one, the issue between Raymond Corporation and AIG National Unionas to whether Arbor Handling [Services, Inc.] is entitled to coverage under the policy at issue. Ifso, five hundred thousand dollars and the costs today [sic] (probably means to date) willbe refunded to the Raymond Corporation. If not, the Raymond Corporation will pay 2.5 million,less costs, back to AIG National Union."
This stipulation is clear and unambiguous in that it contains no provision for the payment ofinterest and if the parties had intended that predecision interest be addressed, they should have sostated (see Mann v Gulf Ins. Co., 300 AD2d 452 [2002]). Therefore, we examine therelevant provisions of the CPLR. Under the circumstances here, we conclude that the provisionsof CPLR 5001 (a), providing for predecision interest in specific situations, are inapplicable. Thisis not an action based on a breach of performance of a contract (i.e., the stipulation) nor can it besaid that prior to the resolution of the coverage issue, Raymond interfered with title to,possession or enjoyment of any property belonging to defendant. Nevertheless, since the Court ofAppeals reinstated the order of Supreme Court, we conclude that CPLR 5002 mandates inclusionof interest from the date of Supreme Court's order (November 5, 2002) to the entry of finaljudgment.
Lastly, we address plaintiffs' argument that Supreme Court erred by not reducing the $2.5million basic judgment by the amount of the costs they incurred in defending the underlyingaction up to the time of the stipulation. First, we again reject defendant's argument, for thereasons hereinbefore expressed, that plaintiffs' failure to serve a reply to its answer constitutes awaiver of this issue. Because of the stipulation, we also reject defendant's argument that the entryof judgment was merely a ministerial act. The stipulation which allows Raymond to recover itscosts and its $500,000 if there is coverage, and allows Raymond to deduct its costs if it must pay$2.5 million if there is no coverage, can only be interpreted as a recognition by the parties thatthe duty to defend is broader than the duty to indemnify (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137[2006]). Plaintffs now argue that the $3 million self-insured retention contained in the policywith defendant was satisfied when Raymond's vendor (Arbor) [*4]contributed its $3 million toward the $6 million settlement makingdefendant responsible for all costs of defense, including the $297,732 that Raymond hadexpended. Whether that argument has merit and whether the $297,732 represents the reasonablecosts of defense cannot be determined from this record and must be remitted to Supreme Courtfor determination.
Cardona, P.J., Crew III, Rose and Kane, JJ., concur. Ordered that the judgment and order aremodified, on the law, without costs, by reversing so much thereof as awarded predecision interestof $895,625; matter remitted to the Supreme Court for further proceedings not inconsistent withthis Court's decision; and, as so modified, affirmed.
Footnote *: The remaining $3 million wascontributed by the insurance carrier for plaintiff TBS Group, Inc., formerly Arbor HandlingServices, Inc., plaintiffs' vendor.