| GJF Constr., Inc. v Sirius Am. Ins. Co. |
| 2011 NY Slip Op 08630 [89 AD3d 622] |
| November 29, 2011 |
| Appellate Division, First Department |
| GJF Construction, Inc., Doing Business as Builders Group et al.,Appellants, v Sirius America Insurance Company,Respondent. |
—[*1] Rubin, Fiorella & Friedman, LLP, New York (Paul Kovner of counsel), forrespondent.
Order and judgment (one paper), Supreme Court, New York County (Richard F. Braun, J.),entered on or about December 21, 2010, after a nonjury trial, declaring that the insurance policyissued by defendant Sirius America Insurance Company does not afford additional insuredcoverage to plaintiff GJF Construction, Inc. or plaintiff 101 Park Avenue Associates, LLC forclaims asserted against them in an underlying personal injury action, affirmed, without costs.
Manzanet-Daniels and RomÁn, JJ., concur in a separate memorandum byRomÁn, J., as follows: In this declaratory judgment action we find that where the insurancepolicy requires that the insurer be given notice of any additional insureds which its policy isintended to cover, the failure to provide such notice precludes coverage as to any such additionalinsured.
The insurance policy contains an endorsement amending the policy to include, as insureds,persons or organizations "as on file with company." While a written request was made to add 101Park Avenue Associates to the policy, the record fails to indicate that such a request was madewith regard to GJF Construction. Contrary to plaintiffs' contention, the act of requesting that anadditional insured be named under the policy was not a purely ministerial act whose failureshould be excused, because while not the only act required by the policy to have the person ororganization named as an additional insured under the policy, it was a critical and material actwhich would have given defendant the option to deny coverage. Accordingly, while it is true that"[w]hen a substantial performance is shown the party claiming the benefit of the contract shouldnot be defeated for the want of a literal compliance as to some unimportant detail" (Porter vTraders' Ins. Co. of Chicago, 164 NY 504, 509 [1900]; see also Jacob & Youngs, Inc. vKent, 230 NY 239, 241 [1921]), here the failure to provide defendant with notice that GJFwas an additional insured deprived defendant from exercising its right to deny coverage under thepolicy (Blumberg v Paul Revere Life Ins. Co., 177 Misc 2d 680, 682 [1998] ["Thegeneral rule is [*2]that an insurance application constitutesnothing more than an offer to the insurer, which it may accept or reject after determining whetheran applicant is a desirable risk"]), such that the failure to fully comply with the policy cannot bedeemed unimportant (cf. Anderson Clayton & Co. v Alanthus Corp., 91 AD2d 985[1983] [plaintiff not excused from contractual obligations when defendant had substantiallyperformed and its breach was trivial in nature]).
The trial court erroneously treated the letter sent by defense counsel to plaintiffs' counsel,advising that GJF was an additional insured under the policy, as an informal, rather than aformal, judicial admission. A formal judicial admission takes the place of evidence and isconclusive of the facts admitted in an action (People v Brown, 98 NY2d 226, 232 n 2[2002]). The hallmark of a formal judicial admission is that it "dispenses with the production ofevidence by conceding, for the purposes of the litigation, the truth of a fact alleged by theadversary" (id. at 232 n 2 [internal quotation marks omitted]).
Here, on February 26, 2008, in response to plaintiffs' letter dated January 14, 2008, whereinplaintiffs stated that they "need[ed] either a letter . . . confirming that. . . GJF Construction, Inc. . . . [was an] . . . additional[ ]insured[ ] . . . under the . . . policy . . . or depositiondates for the Sirius underwriter," defendant sent plaintiff a letter, wherein defendant, clearly inorder to avoid producing a witness from its underwriting department, acknowledged that GJFwas an additional insured. On June 3, 2008, months after its initial letter and after plaintiffs filedtheir note of issue and made a motion in reliance on defendant's representation, defendantcontended that its letter acknowledging that GJF was an additional insured was sent in error andretracted its statement by telephone and in writing. Certainly, defendant's statement had all thetrappings of a formal judicial admission, and it was thus bound by it (Brown at 226 n 2;Burdick v Horowitz, 56 AD2d 882, 883 [1977] [statement made by defendant's counselduring a deposition, to preclude line of questioning, deemed a binding formal judicialadmission]).
Contrary to the position taken by our concurring colleagues, while defendant ultimatelyproduced its underwriter, a witness employed by its agent, it did so only after plaintiffshad already relied on defendant's representation to their detriment and notably only afterthe close of discovery. Accordingly, on these facts, it is evident that defendant's representationwas designed to preclude the exchange of discovery and the production of defendant's witnessdid not make its prior admission any less binding. Moreover, we decline to limit the ambit ofwhat constitutes a formal judicial admission to where within a proceeding, a letter, affirmation ordeposition, happens to manifest itself. Guided by Court of Appeals precedent we instead think itmore prudent to adhere to the definition promulgated in Brown, aptly applicablehere—where plaintiff forewent discovery and relied on defendant's representation tosupport its motion for summary judgment—which defines a formal judicial admission asan admission made to avoid having to produce discovery on a fact at issue (Brown at 226n 2). Notwithstanding the foregoing, defendant's formal judicial admission acknowledging thatGJF was an additional insured under the policy fails to confer coverage to GJF since, as notedabove, there was no compliance with a critical contractual provision of the insurance policy andeven by formal judicial admission, defendant, an insurer, cannot be compelled to providecoverage where none exists by waiver (Albert J. Schiff Assoc. v Flack, 51 NY2d 692,698 [1980]; Drew Chem. Corp. v Fidelity & Cas. Co. of N.Y., 60 AD2d 552 [1977],affd 46 NY2d 851 [1979]).
101 Park Avenue Associates failed to demonstrate that it acted reasonably and with duediligence in notifying defendant of the claim. In fact, 101 Park Avenue Associates never directlynotified defendant of the claim at all, simply tendering it to GJF, who then tendered the claim to[*3]defendant 51 days after 101 Park Avenue Associates was firstnotified of the incident underlying the claim. While a justifiable lack of knowledge of insurancecoverage may excuse a delay in reporting an occurrence, 101 Park Avenue Associates adducedno evidence that it made any effort, let alone reasonably diligent efforts to ascertain whethercoverage existed pursuant to the project contract in order to promptly notify defendant (seeWinstead v Uniondale Union Free School Dist., 201 AD2d 721, 723 [1994]). As such, 101Park Avenue Associates's failure to directly notify defendant and the delay in notificationstemming therefrom is inexcusable as a matter of law (id.). Nor can 101 Park AvenueAssociates rely on the notice provided to defendant by GJF as a "similarly situated" insured,since, as noted above, GJF is not an insured under the policy (see American Home Assur. Co. v BFC Constr. Corp., 81 AD3d545 [2011]).
Catterson, J.P., and Richter, J., concur in a separate memorandum by Richter, J., as follows: Iagree that there is no coverage because GJF's status as an additional insured was not "on file"with Sirius, as required by the policy language. However, I do not conclude that the letter fromdefendant's counsel constitutes a formal judicial admission. During the course of discovery,plaintiffs' counsel sent a letter to defendant's counsel asking whether GJF was an additionalinsured under Sirius's policy. The letter advised that plaintiffs would seek to depose a Siriusunderwriter if Sirius's position was that GJF was not an additional insured. In response,defendant's counsel sent a letter confirming that GJF was an additional insured under the policy.
Several months later, defendant's counsel realized that he had made a mistake and informedplaintiffs' counsel that GJF was not an additional insured. Defendant's counsel expressed hisregret over the mistake and offered to submit a Sirius underwriter for deposition. Plaintiffs'counsel subsequently deposed Patrick J. Conklin, chief underwriting officer for Inter-Reco, theunderwriting arm for Sirius, about GJF's status as an additional insured under the policy.
"A formal judicial admission is an act of a party done in the course of a judicial proceeding,which dispenses with the production of evidence by conceding, for the purposes of the litigation,the truth of a fact alleged by the adversary" (People v Brown, 98 NY2d 226, 232 n 2[2002] [citation omitted]). "[A] formal judicial admission takes the place of evidence and isconclusive of the facts admitted in the action in which [it is] made" (id. [internalquotation marks and citation omitted]). An informal judicial admission is a fact "incidentallyadmitted during the trial or in some other judicial proceeding" (Morgenthow & Latham vBank of N.Y. Co., 305 AD2d 74, 79 [2003], lv denied 100 NY2d 512 [2003][internal quotation marks and citation omitted]). "Such an admission is not conclusive. . . in the litigation but is merely evidence of the fact or facts admitted" (Peoplev Brown, 98 NY2d at 232 n 2 [internal quotation marks and citation omitted]).
Examples of formal judicial admissions include (1) statutory admissions, such as anadmission of fact made pursuant to CPLR 3123, (2) facts admitted by stipulation, (3) factsformally admitted in open court and (4) facts admitted in pleadings (Prince, Richardson on [*4]Evidence § 8-215 [Farrell 11th ed]; see Penna, Inc. v Ruben, 72 AD3d523, 523-524 [2010] [statements in pleadings]; Matter of Columbia County Support Collection Unit v Interdonato, 51AD3d 1167 [2008] [facts formally admitted in open court]). Examples of informal judicialadmissions include (1) statements made in a deposition, (2) statements in a bill of particulars and(3) statements in affidavits (Morgenthow & Latham, 305 AD2d at 79).
Defendant's counsel's letter to his adversary, which was sent during the course of discovery,and which was later discovered to be a mistake and corrected, constitutes, at most, an informaljudicial admission. If statements made in affidavits and depositions do not qualify as formaljudicial admissions, then a statement made in correspondence between counsel, which isunsworn, cannot be considered a formal judicial admission. The letter contains no indicia offormality, was not copied to the court and contains no language suggesting that it was meant tobe a stipulation between the parties.
The language in People v Brown (98 NY2d at 232 n 2) relied upon by my colleagues,which is in a footnote, does not change the result here. There is no indication in counsel's letter,nor any testimony in the record, that the letter was written to "dispense[ ] with the production ofevidence by conceding, for the purposes of the litigation, the truth of a fact alleged by theadversary" (id.). Plaintiffs produced no evidence to refute defendant's contention that thestatement in the letter was a simple mistake (that was subsequently corrected).
Burdick v Horowitz (56 AD2d 882 [1977]) is distinguishable. In Burdick,which does not even use the term "formal judicial admission," the court found the defendants tobe bound by "a stipulation which was made so as to preclude a certain line of questioning at apretrial deposition" (56 AD2d at 883). Here, in contrast, there was no stipulation. Nor, as notedabove, was it shown that the letter was written to preclude further discovery.