| Weiss v Tri-State Consumer Ins. Co. |
| 2012 NY Slip Op 06294 [98 AD3d 1107] |
| September 26, 2012 |
| Appellate Division, Second Department |
| Ella Weiss et al., Individually and as Administratrices of the Estatesof Anton Goldberg and Rifka Goldberg, Deceased, Respondents, v Tri-State ConsumerInsurance Company, Appellant. |
—[*1] Gregory J. Cannata, New York, N.Y. (Alison Cannata Hendele of counsel), forrespondents.
In an action to recover damages pursuant to the supplementary uninsured/underinsuredmotorist endorsement of an insurance policy, the defendant appeals from an order of the SupremeCourt, Kings County (Bunyan, J.), dated March 10, 2011, which granted those branches of theplaintiffs' motion which were, in effect, for summary judgment determining that the amount ofsupplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant tothe subject insurance policy is $400,000 and to dismiss the third and fourth affirmative defensespursuant to CPLR 3211, and denied its cross motion, in effect, for summary judgmentdetermining that the amount of supplementary uninsured/underinsured motorist coverageavailable to the plaintiffs pursuant to the subject insurance policy is limited to $145,000.
Ordered that the order is reversed, on the law, with costs, those branches of the plaintiffs'motion which were, in effect, for summary judgment determining that the amount ofsupplementary uninsured/underinsured motorist coverage available to the plaintiffs pursuant tothe subject insurance policy is $400,000 and to dismiss the third and fourth affirmative defensespursuant to CPLR 3211 are denied, and the defendant's cross motion, in effect, for summaryjudgment determining that the amount of supplementary uninsured/underinsured motoristcoverage available to the plaintiffs pursuant to the subject insurance policy is limited to $145,000is granted.
On March 4, 2003, Rifka and Anton Goldenberg were killed when a vehicle operated by adrunk driver, Michael McGibbon, collided with their vehicle. The insurance policy coveringMcGibbon's vehicle contained coverage limits of $50,000 per person and $100,000 per accident.The Goldenbergs' automobile insurance policy (hereinafter the subject policy), issued by thedefendant, Tri-State Consumer Insurance Company (hereinafter Tri-State), included asupplementary uninsured/underinsured motorist (hereinafter SUM) endorsement which containeda coverage limit of $250,000 per person and $500,000 per accident. The plaintiffs in this action,the Goldenbergs' daughters, who are the administrators of their estates, commenced an action torecover damages from, among others, McGibbon's estate, the owner of McGibbon's vehicle, anda bar and a diner that had served McGibbon alcohol before the accident. The insurer ofMcGibbon's vehicle agreed to pay [*2]the $100,000 maximumcoverage limit of its policy in settlement of the claims against McGibbon's estate and the ownerof his vehicle. The bar and the diner (hereinafter together the Dram Shop defendants), and theirinsurers, agreed to pay a total of $255,000 in settlement of the "Dram Shop" claims assertedagainst them (hereinafter the Dram Shop recovery). Thus, the plaintiffs settled the prior action fora total of $355,000.
The plaintiffs submitted a claim to Tri-State for recovery under the SUM endorsement of thesubject policy. Tri-State asserted that the amount available to the plaintiffs under the SUMendorsement was limited to $145,000 (the $500,000 coverage amount less the total amount of the$355,000 settlement in the prior action). Thereafter, the plaintiffs commenced this action againstTri-State seeking to recover damages pursuant to the SUM endorsement in the amount of$400,000. In the complaint, they alleged that the SUM endorsement's $500,000 coverage limitcould properly be reduced only by the $100,000 attributable to McGibbon's policy, and not by theamount of the Dram Shop recovery. In its answer, the defendant alleged, under the third andfourth affirmative defenses, that the amount of SUM coverage available to the plaintiffs isreduced by the amount of the Dram Shop recovery. The plaintiffs moved, inter alia, in effect, forsummary judgment determining that the amount of SUM coverage available to them pursuant tothe subject policy is $400,000 and to dismiss the third and fourth affirmative defenses pursuant toCPLR 3211, and Tri-State cross-moved, in effect, for summary judgment determining that theamount of such coverage is limited to $145,000. The Supreme Court granted the aforementionedbranches of the plaintiffs' motion and denied Tri-State's cross motion. Tri-State appeals, and wereverse.
The subject policy contained the standard SUM endorsement prescribed by theSuperintendent of Insurance in Regulation No. 35-D (11 NYCRR 60-2.3 [c], [f]). Two conditionsin the endorsement are directly at issue in this appeal. Condition 6 provides:
"6. Maximum SUM Payments. Regardless of the number of insureds, our maximum paymentunder this SUM endorsement shall be the difference between:
"(a) The SUM limits; and
"(b) The motor vehicle bodily injury liability insurance or bond payments received by theinsured or the insured's legal representative, from or on behalf of all persons that may be legallyliable for the bodily injury sustained by the insured.
"The SUM limit shown on the Declarations for 'Each Person' is the amount of coverage forall damages due to bodily injury to one person. The SUM limit shown under 'Each Accident' is,subject to the limit for each person, the total amount of coverage for all damages due to bodilyinjury to two or more persons in the same accident."
Condition 11 provides:
"11. Non-Duplication. This SUM coverage shall not duplicate any of the following:
"(a) Benefits payable under workers' compensation or other similar laws;
"(b) Non-occupational disability benefits under article nine of the Workers' CompensationLaw or other similar law;
"(c) Any amounts recovered or recoverable pursuant to article fifty-[*3]one of the New York Insurance Law or any similar motor vehicleinsurance payable without regard to fault;
"(d) Any valid or collectible motor vehicle medical payments insurance; or
"(e) Any amounts recovered as bodily injury damages from sources other than motor vehiclebodily injury liability insurance policies or bonds."
SUM coverage in New York is a converse application of the golden rule; its purpose is "toprovide the insured with the same level of protection he or she would provide to others were theinsured a tortfeasor in a bodily injury accident" (Matter of Prudential Prop. & Cas. Co. vSzeli, 83 NY2d 681, 687 [1994]; see Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 608 [2009];Raffellini v State Farm Mut. Auto. Ins.Co., 9 NY3d 196, 204 [2007]; see generally Norman H. Dachs and Jonathan A.Dachs, SUM Insurance Dilemma Hits the Mainstream, NYLJ, Sept. 19, 2012 at 3, col 1).With this limited purpose, SUM coverage does not function as a stand-alone policy to fullycompensate the insureds for their injuries (cf. Bauter v Hanover Ins. Co., 247 NJ Super94, 96-97, 588 A2d 870, 872 [1991], cert denied 126 NJ 335, 598 A2d 893 [1991]). Theconditions quoted above make this clear, as do other conditions not directly at issue in this case.
Here, the maximum SUM coverage of the subject policy was $500,000 per accident. Theamount payable under that coverage was reduced, under Conditions 6 (a) and (b), by the$100,000 paid by McGibbon's insurer, inasmuch as that amount constituted a "motor vehiclebodily injury liability insurance . . . payment[ ]" that the plaintiffs received (11NYCRR 60-2.3 [f]). Further, the Dram Shop claims were settled for a total of $255,000. TheDram Shop recovery constitutes, under Condition 11 (e), an amount "recovered as bodily injurydamages from sources other than motor vehicle bodily injury liability insurance policies orbonds." Condition 11 does not allow duplicate recovery of such damages. Consequently, underthe terms of the SUM endorsement, the plaintiffs' receipt of the Dram Shop recovery reduces, bythat same $255,000, the amount payable under the SUM endorsement. The plaintiffs are notpenalized by this reduction, since they received the maximum amount for which they are coveredunder the SUM endorsement: $100,000 from McGibbon's policy, $255,000 from or on behalf ofthe Dram Shop defendants, and $145,000 from Tri-State.
We reject the plaintiffs' argument that 11 NYCRR subpart 60-2, which includes thenonduplication provision, is inconsistent with Insurance Law § 3420 (f) (2) (A). When theLegislature enacted the no-fault structure in 1977, its concern about duplicate payments wasreflected in the law itself (see L 1977, ch 892, § 7; see also Mem of StateExecutive Department, 1977 McKinney's Session Laws at 2448). The adoption by theSuperintendent of Insurance of additional provisions regarding duplication furthers theLegislature's goal, and is not inconsistent with it (cf. Raffellini v State Farm Mut. Auto. Ins.Co., 9 NY3d at 201-202).
Finally, as the plaintiffs point out, a claimant has the right to submit a SUM claim uponexhaustion of the full liability limits of just one tortfeasor (see e.g. S'Dao v National GrangeMut. Ins. Co., 87 NY2d 853 [1995]). However, that does not mean that a claimant's ultimateentitlement to payment under the SUM endorsement may not be reduced or eliminated,depending on amounts recovered from additional tortfeasors (see Matter of Central Mut. Ins. Co. [Bemiss], 12 NY3d 648,657-659 [2009]; Matter of Liberty Mut.Ins. Co. v Walker, 84 AD3d 960, 961 [2011]).
Accordingly, the Supreme Court should have denied those branches of the plaintiffs' motionwhich were, in effect, for summary judgment determining that the amount of SUM coverageavailable to them pursuant to the subject insurance policy is $400,000 and to dismiss the thirdand fourth affirmative defenses pursuant to CPLR 3211, and should have granted the defendant'scross motion, in effect, for summary judgment determining that the amount of such coverage islimited to $145,000. Florio, J.P., Balkin, Hall and Miller, JJ., concur.