| Finkelstein v Lincoln Natl. Corp. |
| 2013 NY Slip Op 04308 [107 AD3d 759] |
| June 12, 2013 |
| Appellate Division, Second Department |
| Harold Finkelstein et al.,Appellants-Respondents, v Lincoln National Corporation et al., Defendants, andLincoln Life & Annuity Company of New York et al.,Respondents-Appellants. |
—[*1] Wilson Elser Moskowitz Edelman & Dicker LLP, New York, N.Y. (Janene M.Marasciullo of counsel), for respondents-appellants.
In an action, inter alia, to recover damages for breach of contract, the plaintiffsappeal, as limited by their notice of appeal and brief, from so much of an order of theSupreme Court, Nassau County (Warshawsky, J.), entered October 14, 2011, as deniedthat branch of their motion which was pursuant to CPLR 3025 (b) for leave to amendtheir complaint to assert a third cause of action so as to allege that the defendant LincolnLife & Annuity Company of New York violated Insurance Law § 4226, and thedefendants Lincoln Life & Annuity Company of New York, Lincoln Financial AdvisorsCorp., Sagemark Consulting, and Siller & Cohen cross-appeal, as limited by their noticeof appeal and brief, from so much of the same order as granted that branch of theplaintiffs' motion which was pursuant to CPLR 3025 (b) for leave to amend thecomplaint to assert a fourth cause of action so as to allege that Randy P. Siller violatedInsurance Law § 2123.
Ordered that the cross appeal is dismissed, as the respondents-appellants are notaggrieved by the portion of the order cross-appealed from (see CPLR 5511); andit is further,
Ordered that the order is reversed insofar as appealed from, on the facts and in theexercise of discretion, and that branch of the plaintiffs' motion which was pursuant toCPLR 3025 (b) for leave to amend their complaint to assert a third cause of action so asto allege that the defendant Lincoln Life & Annuity Company of New York violatedInsurance Law § 4226 is granted; and it is further,
Ordered that one bill of costs is awarded to the plaintiffs.
A person "is aggrieved when he or she asks for relief but that relief is denied inwhole or in part [and] when someone asks for relief against him or her, which the personopposes, and the relief is granted in whole or part" (Mixon v TBV, Inc., 76 AD3d 144, 156-157 [2010]). Here,the portion of the order cross-appealed from granted that branch of the plaintiffs' motionwhich was for leave to amend the complaint so as to add Randy P. Siller as a partydefendant and assert a cause of action against him alleging that he violated InsuranceLaw § 2123. Since that branch of the plaintiffs' motion did [*2]not seek relief against the defendants Lincoln Life &Annuity Company of New York (hereinafter LLACNY), Lincoln Financial AdvisorsCorp. (hereinafter Lincoln Financial), Sagemark Consulting (hereinafter Sagemark), orSiller & Cohen, those defendants are not aggrieved by the portion of the ordercross-appealed from. Accordingly, their cross appeal must be dismissed.
The plaintiffs Harold Finkelstein and Marilyn Finkelstein (hereinafter together theFinkelsteins) created the H. Finkelstein Family Trust (hereinafter the Trust), of whichtheir son, the plaintiff Ronald Finkelstein, is the trustee. The Trust and the Finkelsteinsconsulted with Lincoln Financial through the latter's agents, the defendants Siller &Cohen and Sagemark, to obtain advice about, inter alia, estate planning and the use oflife insurance products to pay estate taxes. After consulting with these defendants, theplaintiffs, in January 2007, purchased a "second to die life insurance policy" issued byLLACNY. The plaintiffs paid the first $800,000 premium by January 28, 2007, andmade their second $800,000 premium payment less than one year later. Thereafter, theplaintiffs cancelled the subject policy upon discovering that American General LifeInsurance Company offered a similar second-to-die life insurance policy with a slightlyreduced death benefit, but at a much lower price for the premium.
In March 2009, the plaintiffs commenced this action against, among others,LLACNY, Lincoln Financial, Sagemark, and Siller & Cohen, asserting causes of actionsounding in breach of contract (first cause of action), breach of fiduciary duty (secondcause of action), fraud (third cause of action), constructive fraud (fourth cause of action),and negligent misrepresentation (fifth cause of action). The plaintiffs alleged that thedefendants induced them to purchase the subject life insurance policy by misrepresentingthat policy to be the best means of achieving their estate planning goals.
Prior to answering, the defendants moved to dismiss the complaint. In an order datedNovember 18, 2009, the Supreme Court directed the dismissal of the complaint insofar asasserted against Lincoln National Corporation pursuant to CPLR 3211 (a) (8), anddirected the dismissal of the third, fourth, and fifth causes of action in the initialcomplaint insofar as asserted against the remaining defendants pursuant to CPLR 3211(a) (7).
Thereafter, the plaintiffs moved for leave to amend the complaint, inter alia, to asserta new third cause of action so as to allege that LLACNY violated Insurance Law §4226. The Supreme Court, among other things, denied that branch of the plaintiffs'motion which sought leave to add the proposed Insurance Law § 4226 cause ofaction against LLACNY.
"Leave to amend the pleadings 'shall be freely given' absent prejudice or surpriseresulting directly from the delay" (McCaskey, Davies & Assoc. v New York CityHealth & Hosps. Corp., 59 NY2d 755, 757 [1983], quoting CPLR 3025 [b]), "unlessthe proposed amendment is palpably insufficient or patently devoid of merit" (Lucido v Mancuso, 49 AD3d220, 222 [2008]; seeMaldonado v Newport Gardens, Inc., 91 AD3d 731, 731-732 [2012]; Gongolewsky v Empire Ins.Co., 51 AD3d 720, 721 [2008]). "A determination whether to grant such leave iswithin the Supreme Court's broad discretion, and the exercise of that discretion will notbe lightly disturbed" (Gitlin vChirinkin, 60 AD3d 901, 902 [2009]; see Ingrami v Rovner, 45 AD3d 806, 808 [2007]).
The Supreme Court improvidently exercised its discretion in denying that branch ofthe plaintiffs' motion which was for leave to amend their complaint to assert a cause ofaction alleging that LLACNY violated Insurance Law § 4226. Insurance Law§ 4226 prohibits, inter alia, an insurer authorized to sell life insurance policies inthis state from issuing or circulating illustrations, circulars, statements, or memorandamisrepresenting the terms, benefits, or advantages of any of its policies (seeInsurance Law § 4226 [a] [1]). "Insurance Law § 4226 (a) (1). . . reflects State policy that insurers deal fairly with their insureds and thepublic at large" (Unibell Anesthesia v Guardian Life Ins. Co. of Am., 239 AD2d248, 248 [1997]).
Here, the proposed new third cause of action was not palpably insufficient orpatently devoid of merit since the plaintiffs alleged that LLACNY misrepresented theterms, benefits, or advantages of the subject policy by presenting the subject policy so asto make it appear to offer the [*3]most advantageousdeath benefit and premium structure out of all commercially available policies, by failingto disclose the existence of other policies that were more advantageous, and by using lessdesirable health and age assumptions in comparing, to the subject policy, the competingpolicies that it identified and disclosed. Further, LLACNY will not suffer any prejudiceor surprise as a result of this amendment. Accordingly, the Supreme Court should havegranted that branch of the plaintiffs' motion which was for leave to amend the complaintto assert the new third cause of action so as to allege that LLACNY violated InsuranceLaw § 4226.
The defendants' remaining contentions are without merit. Rivera, J.P., Leventhal,Austin and Miller, JJ., concur. [Prior Case History: 2011 NY Slip Op32683(U).]