| Markel Ins. Co. v American Guar. & Liab. Ins. Co. |
| 2013 NY Slip Op 07455 [111 AD3d 678] |
| November 13, 2013 |
| Appellate Division, Second Department |
| Markel Insurance Company, as Assignee of AmericanGardens Owners Corp. and Others, and as Subrogee of New Empire Group, Ltd., et al.,Appellants, v American Guarantee and Liability Insurance Company et al.,Defendants and Rebore Thorpe & Pisarello, P.C.,Respondent. |
—[*1] L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, N.Y. (Amy M. Monahanand Michael J. Testa of counsel), for respondents.
In an action, inter alia, to recover damages for legal malpractice, the plaintiffs appealfrom an order of the Supreme Court, Nassau County (Parga, J.), entered March 8, 2012,which granted the motion of the defendant Rebore Thorpe & Pisarello, P.C., pursuant toCPLR 3211 (a) (7) to dismiss the complaint insofar as asserted against it for failure tostate a cause of action.
Ordered that the order is affirmed, with costs.
In September 2005, a construction worker was injured on premises owned byAmerican Gardens Owners Corp. In November 2005, the worker commenced a personalinjury action (hereinafter the underlying action) against American Gardens OwnersCorp., and later joined, as defendants, the property's managing agent, American GardensManagement, LLC, and the managing agent's affiliate, American Gardens ManagementCorp. (hereinafter collectively the American Gardens defendants). The AmericanGardens defendants' primary insurer was Chartis Insurance Company (hereinafterChartis), but the American Gardens defendants also carried an umbrella excess liabilitypolicy issued by American Guarantee and Liability Insurance Company (hereinafterAGLIC). The AGLIC policy (hereinafter the Policy) contained an endorsement requiringthe insured, or someone on its behalf, to provide notice to AGLIC of any claims orlawsuits against the insured as soon as practicable. The endorsement also provided thatnotice to any agent of AGLIC would constitute notice to AGLIC. New Empire Group,Ltd. (hereinafter NEG), was a managing general agent for AGLIC and a programadministrator for the Policy. A Program Administrator Agreement between NEG andAGLIC delegated authority to NEG to act as AGLIC's agent, inter alia, for underwritingexcess liability insurance policies and to accept notices of claim or suit on its behalf.NEG itself carried an Insurance Agents & Brokers Errors and Omissions policy withMarkel [*2]Insurance Company (hereinafter Markel).
Shortly after the commencement of the underlying action, the American Gardensdefendants gave notice thereof to their retail insurance broker, which, in turn, notifiedNEG of the underlying action within one month after the commencement of theunderlying action. AGLIC nonetheless disclaimed coverage, alleging lack of timelynotice. Rebore Thorpe & Pisarello, P.C. (hereinafter Rebore) represented the AmericanGardens defendants in the underlying action.
Thereafter, the underlying action was settled, and the settlement agreement providedthat Chartis, as the primary insurer of the American Gardens defendants, would pay theplaintiffs in the underlying action the sum of $1,000,000, and Markel, on behalf of NEG,would pay the sum of $2,000,000. The plaintiffs in the underlying action gave a releaseto the American Gardens defendants, which assigned, to Markel, the rights of theAmerican Gardens defendants as against AGLIC, Rebore, and the retail insurance brokerof the American Gardens defendants. Markel and NEG thereafter commenced this action,inter alia, against Rebore to recover monies that Markel had paid to settle the underlyingaction. In the complaint, Markel and NEG alleged that, out of concern that NEG mightbe found liable for the purported failure of the American Gardens defendants to notifyAGLIC, Markel agreed to participate in and contribute to the settlement of theunderlying action. Markel asserted a cause of action against Rebore alleging legalmalpractice and, as subrogee of NEG, a cause of action seeking common-lawindemnification. Rebore moved pursuant to CPLR 3211 (a) (7) to dismiss these twocauses of action. The Supreme Court granted Rebore's motion. Markel and NEG appeal.
To state a cause of action to recover damages for legal malpractice, a plaintiff mustallege that the attorney failed to exercise "the ordinary reasonable skill and knowledgecommonly possessed by a member of the legal profession," and that "the breach of thisduty proximately caused the plaintiff to sustain actual and ascertainable damages" (Frederick v Meighan, 75AD3d 528, 531 [2010]; seeRudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Board of Mgrs. of Bay Club vBorah, Goldstein, Schwartz, Altschuler & Nahins, P.C., 97 AD3d 612, 613[2012]; Markowitz v KurzmanEisenberg Corbin Lever & Goodman, LLP, 82 AD3d 719, 719 [2011]).
Here, accepting as true the facts alleged in the complaint and according the plaintiffsthe benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83,87-88 [1994]; East HamptonUnion Free School Dist. v Sandpebble Bldrs., Inc., 66 AD3d 122, 125 [2009],affd 16 NY3d 775 [2011]), the complaint failed to state a cause of action againstRebore to recover damages for legal malpractice. Although Markel was the assignee ofany malpractice claim that the American Gardens defendants might have against Rebore,the complaint failed to allege any facts from which it could be reasonably inferred thatthe American Gardens defendants suffered ascertainable damages as a result of Rebore'salleged negligence (see Siwiec vRawlins, 103 AD3d 703, 704 [2013]; Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847-848[2012]). As set forth in the complaint, the American Gardens defendants were notrequired to pay any portion of the settlement of the underlying action, and the AmericanGardens defendants were fully released from liability as result of that settlement. Further,there is no allegation that the American Gardens defendants suffered any other damageas a result of any alleged failure by Rebore to exercise the ordinary reasonable skill andknowledge commonly possessed by a member of the legal profession. Accordingly, theSupreme Court properly granted that branch of Rebore's motion which was pursuant toCPLR 3211 (a) (7) to dismiss the cause of action alleging legal malpractice.
Moreover, contrary to Markel's and NEG's contentions, the Supreme Court properlygranted that branch of Rebore's motion which was pursuant to CPLR 3211 (a) (7) todismiss the cause of action against it for common-law indemnification. The common-lawindemnification cause of action was based on Markel's participation in and contributionto the settlement in the underlying action, to which Markel was not a party. There was nofinding that Markel's insured, NEG, was liable to the plaintiff in the underlying action.The doctrine of subrogation, upon which the common-law indemnification cause ofaction against Rebore is grounded, however, may not "be invoked where the paymentssought to be recovered are voluntary" (Broadway Houston Mack Dev., LLC v Kohl, 71 AD3d937, 937 [2010]; seeMerchants Mut. Ins. Group v Travelers Ins. Co., 24 AD3d 1179, [*3]1180 [2005]). "A party seeking subrogation can establishthat its payments were not voluntary either by pointing to a contractual obligation or tothe need to protect its own legal or economic interests" (Broadway Houston MackDev., LLC v Kohl, 71 AD3d at 937 [citation omitted]). "When invoking the latterground, however, the party seeking subrogation must show that the act is not merelyhelpful but necessary to the protection of its interests" (id.). Here, the complaintdid not allege facts from which it could be reasonably inferred that Markel's partialcontribution to the settlement in the underlying action, made on behalf of NEG, wasmandated or compelled by its policy with NEG, or that such payment was necessary tothe protection of NEG's interests (cf. id. at 938; but cf. NYP Holdings, Inc. vMcClier Corp., 65 AD3d 186, 189-190 [2009]). Accordingly, the SupremeCourt properly granted that branch of Rebore's motion which was to dismiss the cause ofaction against it for common-law indemnification (see CPLR 3211 [a] [7];see generally East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc.,66 AD3d at 125). Mastro, J.P., Balkin, Leventhal and Lott, JJ., concur. [Prior CaseHistory: 2012 NY Slip Op 30642(U).]