| Atlantic Balloon & Novelty Corp. v American Motorists Ins.Co. |
| 2009 NY Slip Op 04174 [62 AD3d 920] |
| May 26, 2009 |
| Appellate Division, Second Department |
| Atlantic Balloon & Novelty Corp. et al.,Respondents, v American Motorists Insurance Company, Appellant-Respondent, andGeorge Wagner Associates, Respondent-Appellant, et al.,Defendant. |
—[*1] Kral, Clerkin, Redmond, Ryan, Perry & Girvan, LLP, Mineola, N.Y. (Andrew J. Mihalick ofcounsel), for respondent-appellant.
In an action to recover damages for breach of contract and negligence, the defendantAmerican Motorists Insurance Company appeals from so much of an order of the SupremeCourt, Suffolk County (Pines, J.), entered October 15, 2007, as denied its motion for summaryjudgment dismissing the complaint insofar as asserted against it, and the defendant GeorgeWagner Associates cross-appeals, as limited by its brief, from so much of the same order asdenied its motion pursuant to CPLR 3211 (a) (5) to dismiss the complaint and all cross claimsinsofar as asserted against it as time-barred, or alternatively, for summary judgment dismissingthe complaint and all cross claims insofar as asserted against it.
Ordered that the order is reversed insofar as appealed and cross-appealed from, on the law,with one bill of costs payable by the plaintiffs to the defendants American Motorists InsuranceCompany and George Wagner Associates, the motion of the defendant American MotoristsInsurance Company for summary judgment dismissing the complaint insofar as asserted againstit and that branch of the motion of the defendant George Wagner Associates which was pursuantto CPLR 3211 (a) (5) to dismiss the complaint and all cross claims insofar as asserted it astime-barred are granted, and the motion of the defendant George Wagner Associates is otherwisedenied as academic.
In December 1994 the plaintiffs Atlantic Balloon & Novelty Corp. (hereinafter AtlanticBalloon) and World International Buying Corp., utilized the defendant George WagnerAssociates (hereinafter Wagner) to procure an insurance policy on their behalf. The policy,issued by the defendant American Motorists Insurance Company (hereinafter AmericanMotorists) provided "business personal property" coverage for the plaintiffs in the amount of$100,000 for the period December 16, 1994 through December 16, 1995.
During the coverage period, Atlantic Balloon contracted with an auctioneer to conduct anauction of Atlantic Balloon's inventory. Atlantic Balloon claims that the auctioneer never turned[*2]over the proceeds from the auction, which occurred on orabout May 25, 1995 and May 26, 1995, and stole some of Atlantic Balloon's merchandise.Atlantic Balloon also claims that the auctioneer sold the merchandise for less than theagreed-upon amount and failed to ensure that bidders paid for items prior to leaving thepremises.
The plaintiffs thereafter made a claim to American Motorists pursuant to the insurancepolicy for losses allegedly sustained during the auction. American Motorists denied the claim.The plaintiffs brought this action against American Motorists seeking damages for breach of theinsurance contract. The plaintiffs later added Wagner as a defendant, asserting that it wasnegligent in its procurement of the policy.
American Motorists moved for summary judgment dismissing the complaint insofar asasserted against it based on, among other things, the policy's exclusionary language. Wagnermoved pursuant to CPLR 3211 (a) (5) to dismiss the complaint and all cross claims insofar asasserted against it as time-barred, or alternatively, for summary judgment dismissing thecomplaint and all cross claims insofar as asserted against it. The Supreme Court denied bothmotions.
We disagree with the Supreme Court's determination that the plaintiffs' negligence cause ofaction against Wagner accrued in May 1995, when the plaintiffs experienced the alleged theft ofcash and merchandise during the auction. Rather, the plaintiffs sustained an injury in the form oflosing a property right to the proper insurance protection when Wagner purportedly procured aninadequate policy on December 16, 1994 (see Kronos, Inc. v AVX Corp., 81 NY2d 90[1993]; Neary v Tower Ins., 32AD3d 920 [2006]; Mauro v Niemann Agency, 303 AD2d 468 [2003]; Cappelli vBerkshire Life Ins. Co., 276 AD2d 458, 459 [2000]). Thus, the statute of limitations on thenegligence cause of action expired on December 16, 1997 (see CPLR 214 [4]). Since theplaintiffs joined Wagner as a defendant on April 3, 1998 their negligence claim against Wagneris time-barred. Although the statute of limitations for a contractual breach would not haveexpired until December 16, 2000, six years after Wagner purportedly failed to obtain theappropriate coverage, the cause of action against Wagner was grounded in negligence only.
The Supreme Court also erred in denying the motion of American Motorists for summaryjudgment dismissing the complaint insofar as asserted against it. " '[C]ourts bear theresponsibility of determining the rights or obligations of parties under insurance contracts basedon the specific language of the policies' " (Sanabria v American Home Assur. Co., 68NY2d 866, 868 [1986], quoting State of New York v Home Indem. Co., 66 NY2d 669,671 [1985]), whose unambiguous provisions must be given "their plain and ordinary meaning"(United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [1986]; see Maroney v New York Cent. Mut. FireIns. Co., 5 NY3d 467, 471-472 [2005]; Catucci v Greenwich Ins. Co., 37 AD3d 513, 514 [2007]). "Anexclusion from coverage must be specific and clear in order to be enforced (Seaboard Sur.Co. v Gillette Co., 64 NY2d 304, 311 [1984]), and an ambiguity in an exclusionary clausemust be construed most strongly against the insurer" (Guachichulca v Laszlo N. Tauber & Assoc., LLC, 37 AD3d 760,761 [2007] [internal quotation marks omitted]; see Ace Wire & Cable Co. v Aetna Cas. &Sur. Co., 60 NY2d 390, 398 [1983]; Ruge v Utica First Ins. Co., 32 AD3d 424, 426 [2006]). However,the plain meaning of the policy's language may not be disregarded to find an ambiguity wherenone exists (see Bassuk Bros. v UticaFirst Ins. Co., 1 AD3d 470, 471 [2003]; Garson Mgt. Co. v Travelers Indem. Co. ofIll., 300 AD2d 538, 539 [2002]; Sampson v Johnston, 272 AD2d 956 [2000]).
The policy issued by American Motorists contains an exclusion for "[d]ishonest or criminalacts by you, any of your partners, employees, directors, trustees, authorized representatives oranyone to whom you entrust the property for any purpose." It also contains an exclusion for"False Pretense" which it defines as "Voluntary parting with any property by you or anyone elseto whom you have entrusted the property if induced to do so by any fraudulent scheme, trick,device or false pretense."
American Motorists met its initial burden of establishing its entitlement to judgment as amatter of law by demonstrating that these exclusions clearly applied to the loss in this case (see Catucci v Greenwich Ins. Co., 37AD3d 513 [2007]; see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324[1986]). The contract between the auctioneer and Atlantic Balloon established that AtlanticBalloon[*3]"entrusted" its merchandise to the auctioneer because,pursuant to the contract, Atlantic Balloon agreed that the auctioneer was to take the merchandiseon "consignment" and auction it on Atlantic Balloon's behalf. Thus, the merchandise and auctionproceeds purportedly stolen during the auction are not a covered loss under the policy. Inopposition, the plaintiffs failed to raise a triable issue of fact (see Zuckerman v City of NewYork, 49 NY2d 557 [1980]).
The remaining contentions of American Motorists and Wagner have been rendered academicby our determination. Santucci, J.P., Florio, Covello and Dickerson, JJ., concur. [See2007 NY Slip Op 33283(U).]