STANISLAUS v. THE STATE OF NEW YORK, #2001-019-579, Claim No. 98974, Motion Nos.
M-62856, M-64113, CM-63062
State's motion for a declaratory judgment is granted; Insurance company's
cross-motion for severance is denied as moot; Insurance company's application
for an open commission of an out-of-state witness is granted.
Footnote (claimant name)
THE STATE OF NEW YORK
Footnote (defendant name)
THE STATE OF NEW YORK
INVESTORS INSURANCE COMPANY OF AMERICA
FERRIS D. LEBOUS
BISOGNO & MEYERSONBY: Michael C. Meyerson, Esq., of counsel
HON. ELIOT SPITZER, ATTORNEY GENERAL
BY: Alan B. Berkowitz, Assistant Attorney General, of counsel
MELITO & ADOLFSEN, P.C.BY: Amy C. Clauss, Esq., of counsel
December 11, 2001
See also (multicaptioned
Defendant and Third-Party Claimant State of New York (hereinafter "State")
moves for a declaratory judgment pronouncing that Third-Party Defendant
Investors Insurance Company of America (hereinafter "Investors") is obligated to
defend the State in the underlying claim filed by Claimant Thomas Stanislaus.
Investors opposes the motion and cross-moves for an order pursuant to CPLR 603
and 1010 severing this third-party claim from the underlying claim. Oral
argument was held via conference call on May 10, 2001 after which supplemental
submissions were requested by the Court in order to clarify both factual and
legal issues. Thereafter, several joint requests for adjournments were
although the last adjournment
resulted from the tragic events of September 11, 2001. Investors also makes an
application for an open commission authorizing the taking of the deposition of
an out-of-state nonparty witness, Michael Culnen.
The Court has considered the following papers in connection with this
Claim, filed September 16, 1998.
Notice of Impleader, filed July 5, 2000.
Notice of Motion No. M-62856, dated December 13, 2000, and filed December 18,
Affirmation of Alan B. Berkowitz, AAG, in support of Motion No. M-62856, dated
December 14, 2000, with attached exhibits.
Notice of Cross-Motion No. CM-63062, dated February 7, 2001, and filed February
Affirmation of Amy C. Clauss, Esq., in support of Cross-Motion No. CM-63062 and
in opposition to Motion No. M-62856, dated February 7, 2001, with attached
Affirmation of Alan B. Berkowitz, AAG, in opposition to Cross-Motion No.
CM-63062 and in support of Motion No. M-62856, dated February 19, 2001, and
filed February 21, 2001, with attached exhibits.
Affidavit of Michael Culnen, in opposition to Cross-Motion No. CM-63062, sworn
to February 12, 2001.
Affidavit of Michael Culnen in opposition to Cross-Motion No. CM-63062 and in
support of Motion No. M-62856, sworn to August 2, 2001, and filed August 8,
2001, with attached exhibits.
Affirmation of Alan B. Berkowitz, AAG, in support of Motion No. M-62856, and
in opposition to Cross-Motion No. CM-63062, dated August 6, 2001, and filed
August 8, 2001.
Affirmation of Amy C. Clauss, Esq., in opposition to Motion No. M-62856, and in
support of Cross-Motion No. CM-63062, dated October 23, 2001, and filed October
Notice of Motion No. M-64113, dated September 6, 2001, and filed October 3,
Affidavit of Amy C. Clauss, Esq., in support of Motion No. M-64113,
Application for a Commission, by Amy C. Clauss, Esq., dated August 29,
In April 1997, TPK Maria Maintenance (hereinafter "Maria") entered into a
contract with the State to perform concrete deck repair and installation on five
State bridges. On July 27, 1998, Claimant Thomas Stanislaus (hereinafter
"Claimant"), an employee of Maria, was injured when he fell off a ladder while
working on the Belt Parkway bridge which was part of the aforementioned project.
Claimant commenced the underlying claim against the State alleging negligence
and violations of the Labor Law. The underlying claim was filed in the Office
of the Clerk on September 16, 1998 and served upon the Attorney General's office
on September 17, 1998. Pursuant to the State-Maria contract, Maria was
obligated to procure liability insurance naming the State as an additional
insured. Maria purchased a Commercial General Liability policy (hereinafter
"CGL") from Investors, as well as - or so it thought - an Owners and Contractors
Protective Liability policy (hereinafter "OCP"), the details of which will be
Through this motion (M-62856), the State seeks to compel a defense from
Investors in the underlying claim based upon said coverage, although it
previously sought similar relief from a different carrier. By way of
background, the State originally commenced a third-party action against United
States Fidelity & Guaranty Ins. Co. a/k/a St. Paul Insurance Companies
(hereinafter "USF&G") on March 31, 1999 (hereinafter "USF&G Third-Party
Claim") for defense and indemnification. The USF&G Third-Party Claim was
discontinued upon stipulation after USF&G established to the State's
satisfaction that the USF&G policy had expired on April 15, 1998 which was
prior to the subject accident.
approximately nine months later on July 5, 2000, the State commenced this second
third-party action against Investors (hereinafter "Investors Third-Party Claim")
seeking a defense in the underlying claim. Investors has refused to provide a
When this motion was originally filed almost one year ago, the State contended
that Investors had issued both an OCP policy and a CGL policy to Maria naming
the State as an insured as evidenced by a Certificate of Insurance dated
February 8, 1999. (Exhibit B attached to Exhibit G of Affirmation of Alan B.
Berkowitz, AAG, dated December 14, 2000). However, upon oral argument, the
Court questioned the validity of said Certificate of Insurance and the State
undertook further investigation before submitting supplemental submissions. The
State now takes the position based upon revised facts that Investors issued a
CGL policy but that an OCP policy, although requested, was never issued due to
agent error. As such, the State has withdrawn from consideration the
Certificate of Insurance dated February 8, 1999 attached to the State's initial
The State now relies on two Certificates of Insurance dated February 23, 1998
and September 11, 1998, hereinafter "Certificate #1" and "Certificate #2",
respectively. (Exhibits B & C to Affidavit of Michael Culnen sworn to
August 2, 2001). On their face, these Certificates reflect the following
Certificate of Insurance Coverage Carrier Effective dates
#1 2-23-98 CGL Investors 11-10-97 to 11-10-98
OCP USF&G 4-15-97 to 4-15-98
#2 9-11-98 CGL Investors 11-10-97 to 11-10-98
OCP Investors 4-15-98 to 4-15-99
According to the State's supplemental submissions, the OCP policy listed on
Certificate #2 was never actually issued by Investors due to agent error. The
State submits a supplemental affidavit from Michael Culnen, President of C &
H Agency, formerly known as The Turner Group, an insurance brokerage firm
located in Totowa, New Jersey. Mr. Culnen avers that he ordered an OCP policy,
on behalf of Maria, from Investors through its authorized agent, AGC Service
Inc. (hereinafter "AGC") on an unidentified date "prior to the day of the
accident". (Affidavit of Michael Culnen sworn to August 2, 2001, ¶ 4). On
May 19, 1999, almost ten months after the accident, Mr. Culnen discovered that
AGC had failed to place the order with Investors as requested. In other words,
the State admits that Investors never actually issued an OCP policy.
From a factual standpoint, Investors concedes it issued the CGL policy
reflected on Certificates #1 and #2; denies issuing the OCP policy as shown on
Certificate #2; and further disputes the validity of Certificate #2 in the first
instance. More specifically, Investors contends that Certificate #2 is evidence
that USF&G renewed its OCP policy (as shown on Certificate #1) or, at the
very least, raises questions of fact regarding that possibility for reasons that
will be discussed herein. Moreover, Investors insists that its CGL policy is
merely an excess policy. Investors does not admit or deny or, for that matter
even address, the allegation of agent error raised in the State's supplemental
I. State's Motion for a Declaratory Judgment
The threshold question is whether this Court has jurisdiction over the issues
The Court of Claims is granted the power to issue a declaratory judgment
pursuant to Court of Claims Act (hereinafter "CCA") § 9 (9-a):
[w]ith respect to any controversy involving the obligation of an insurer to
indemnify or defend a defendant in any action pending in the court of claims,
provided that the court shall have no jurisdiction to enter a judgment against
an insurer pursuant to this subdivision either: (i) for money damages; or, (ii)
if the insurer would otherwise have a right to a jury trial of the controversy
with respect to which the declaratory judgment is sought.
In other words, this Court does not have jurisdiction to either enter a money
judgment in connection with a declaratory judgment or to make a declaratory
judgment in the first instance if the insurer otherwise has the right to a jury
trial. An insurer's entitlement to a jury trial in the context of a declaratory
judgment has been addressed in the Court of
(Sangirardi v State of New
, 152 Misc 2d 423; Dennis v New York State Thruway Authority
Cl., October 28, 1998, Ruderman, J., Claim No. 96628, Motion No. M-58028,
Cross-Motion No. CM-58100). However, the right to a jury trial is contingent
upon a request or it is waived. (CPLR 4102). Here, this Court has the
jurisdiction to determine this matter because Investors has not demanded a jury
b). Duty to Defend
The substantive issue presented is whether Investors has a duty to defend the
State in the underlying claim. The duty to defend is commonly described as
broad in nature. (Sea Crest Constr. Corp. v Centennial Ins. Co., 175
AD2d 453, 454). The proper test to ascertain whether the duty to defend is
triggered is in the pleadings or, stated another way, "[s]o long as the claims,
even though predicated on debatable or even untenable theory, may rationally be
said to fall within policy coverage, whatever may later prove to be the limits
of the insurer's responsibility to pay, there is no doubt that it is obligated
to defend [citation omitted]." (Schwamb v Fireman's Ins. Co. of Newark,
N.J., 41 NY2d 947, 949). Moreover, it is well-settled that:
[a]n insurer denying a duty to defend has the burden to establish as a matter of
law on a summary judgment motion that the injury complained of falls outside the
coverage of the policy or that claims against the insured are unambiguously
exempted from coverage [citation omitted].
(Munzer v St. Paul Fire & Mar. Ins. Co., 145 AD2d 193, 198; see
also, Seaboard Sur. Co.
, 64 NY2d 304, 310; Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d
875, 876). Stated another way, here "[t]he burden of proof rests on the insurer
claiming to have no duty to defend (see, Sea Crest Constr. Corp. v
Centennial Ins. Co., 175 AD2d 453, 454)." (United States Fid. and Guar.
Co. v U.S. Underwriters Ins. Co., 194 AD2d 1028, 1029).
The State contends that it is entitled to a defense from Investors based on the
following arguments: (1) the mere issuance of Certificate #2 equates to a
temporary contract of insurance even without the issuance of an OCP policy; (2)
that Certificate #2 serves to estop Investors from denying coverage; and (3)
assuming, arguendo, the lack of OCP coverage, Investors is obligated to
provide a defense based upon the CGL policy undisputably in effect on the date
of the subject accident.
For its part, Investors admits it issued a CGL policy to Maria with the State
as a named insured, but denies issuing any OCP policy. More specifically,
Investors makes a three-fold argument in opposition to the State's motion for a
declaratory judgment: (1) Investors did not issue an OCP policy to Maria's; (2)
a Certificate of Insurance is not the equivalent of an insurance binder and/or
policy; and (3) Investors duty to defend under the CGL policy, as an excess
policy, is not triggered without a coexistent OCP policy.
1. OCP Coverage
A. Did Investors issue an OCP policy?
Investors denies it issued an OCP policy. The State concedes this fact, but
argues that said omission was only because of Investors' agent's error. In
short, there does not appear to be any real dispute regarding the inescapable
conclusion that Investors did not issue an OCP policy to Maria be it due to
agent error or otherwise. The parties do, however, disagree sharply on the
consequences of said failure relative to the issuance of certificates of
insurance in general and the existence of Investors' CGL policy to be discussed
B. Did USF&G issue an OCP policy?
While denying its own issuance of an OCP policy, Investors still argues there
is a question of fact about whether USF&G renewed its OCP policy from the
year immediately preceding this accident as reflected on Certificate #1. First,
Investors asserts that Certificate #2 "[d]oes not list a valid Investors policy
number." (Supplemental Affirmation in Opposition, ¶ 5). Second, Investors
points to the sequential nature of the OCP policy numbers as listed on
Certificates #1 and #2.
Investors argues that the successive sequence of the policy number on
Certificate #2 [policy number "041598-1A"] compared to Certificate #1 [policy
number "041597-1A"] demonstrates that USF&G actually renewed its earlier OCP
policy, despite the Stipulation of Discontinuance of the USF&G Third-Party
Claim to the contrary. (Exhibit 3 to Affirmation of Amy C. Clauss, Esq.).
Although Investors does not submit an affidavit from someone with first-hand
knowledge of the policy numbering scheme of either Investors or USF&G, the
State offers nothing in response to this assertion. While on their face it does
appear that these policy numbers are sequential, they also appear to be a
condensed version of the effective date of
However, without more this Court
cannot ascertain whether such a numbering scheme is unique to USF&G;
standard within the industry; or a mistaken entry.
In sum, with respect to the existence of any OCP policy, there is no question
but that Investors did not issue an OCP policy, although Investors has raised a
question of fact as to whether USF&G renewed its earlier OCP policy.
2. Certificate of Insurance
The parties take sharply divergent views of Certificate #2. Initially, the
Court notes that this "certificate of insurance" is a form prepared by the State
Department of Transportation. (Zurich Ins. Co. v White
, 221 AD2d 700,
88 NY2d 804). The State describes a certificate of insurance
as the equivalent of a binder, thereby creating a temporary contract of
insurance. While it is generally accepted "[t]hat an insurance binder is a
temporary or interim policy until a formal policy is issued [citations
omitted]", (Springer v Allstate Life Ins
. Co. of N.Y., 94 NY2d 645, 649),
and is a separate and distinct contract from the insurance policy itself the
State offers nothing supporting the position that the terms "certificate of
insurance" and "binder" are interchangeable. In opposition, Investors argues
that certificates of insurance are not temporary insurance binders, but that
such certificates are considered "matters of information only and generally
confer no rights upon the Certificate holder." (Supplemental Affirmation in
Opposition, ¶ 6). However, the case cited by Investors is distinguishable
from the facts at hand since the certificate of insurance under scrutiny in that
case contained specific limiting language such as "'a matter of information only
and confer[red] no rights upon' [the plaintiff]". (American Ref-Fuel
Co. of Hempstead v Resource Recycling
, 248 AD2d 420, 423; see also
McGill v Polytechnic Univ.
, 235 AD2d 400, 402). Here, the Certificate of
Insurance does not contain such limiting
Additionally, these Certificates
contain a clause indicating that "[p]olicy coverage MUST agree with coverage
stated on this Certificate." (Exhibits B and C to Affidavit of Michael Culnen
sworn to August 2, 2001).
It is well-settled that a certificate of insurance is evidence of an agreement
to provide coverage, "[b]ut it is neither conclusive proof of the existence of
such a contract nor, in and of itself, a contract to insure plaintiff [citations
omitted]." (Bucon, Inc. v Pennsylvania Mfg. Assn. Ins. Co., 151 AD2d
207, 210; see also, Morrison-Knudsen Co. v Continental Cas., 181
AD2d 500; Buccini v 1568 Broadway Assocs., 250 AD2d 466, 469). Moreover,
on a summary judgment motion, such as here, a certificate of insurance "[i]s not
sufficient, standing alone as it does here to prove coverage as a matter of
law." (Horn Maintenance Corp. v Aetna Cas. & Sur. Co., 225 AD2d 443,
444). As such, neither Certificate #1 nor Certificate #2 is sufficient to
establish coverage in the case at hand.
Additionally, on the subject of these certificates of insurance, it warrants
mentioning that Certificate #2 is dated September 11, 1998, almost 1 ½
months after the underlying accident. The State acknowledges this fact but Mr.
Culnen avers that "[a]lthough this certificate was prepared after the date of
the accident, it was prepared at such a time before we were aware of an error
committed by the agent of Investors Insurance-AGC Services." (Affidavit of
Michael Culnen sworn to August 2, 2001, ¶ 3).
In view of the foregoing, this Court finds that Certificate #2, standing alone,
is insufficient to establish OCP coverage by Investors as a matter of law.
3. Equitable Estoppel
The State further argues that the doctrine of equitable estoppel should be
applied against Investors preventing it from denying coverage due to the
existence of Certificate #2 "[g]iven to them by Investor's [sic
(Affirmation of Alan B. Berkowitz, AAG, dated August 6, 2001; ¶ 9).
Investors does not respond to this argument. Nevertheless, it is well-settled
that the doctrine of equitable estoppel cannot be used to create coverage where
no policy exists in the first instance. (Penske Truck Leasing Co. v Home
, 251 AD2d 478; Taft v Equitable Life Assur. Socy. of U.S.
173 AD2d 267; Chrapa v Johncox
, 60 AD2d 55, lv dismissed
836). Here, Investors never issued an OCP policy. It appears that the cases
cited by the State involved situations where the insurance company had actually
issued a policy, but a discrepancy arose between the certificate of insurance
and the policy itself. (Zurich Ins. Co. v White
AD2d, at 703 [contradiction between certificate of insurance and policy relative
to deductible clause; court found issuance of certificate of insurance
containing no deductible clause was sufficient to apply estoppel doctrine
preventing company from asserting deductible clause located in policy];
Bucon, Inc. v Pennsylvania Mfg. Assn. Ins. Co.
, 151 AD2d
207 [certificate of insurance amended to include additional insured, but policy
never amended due to clerical error; insurance company estopped from denying
coverage to named additional insured on certificate of insurance). This Court
found no case in which equitable estoppel was applied when no policy existed in
the first instance even if the lack of policy was due to agent error. Moreover,
although the State describes Certificate #2 as being provided by Investors'
agent, it appears that said Certificate was signed by a representative of The
Turner Group, a broker for Maria, but not AGC, Investors'
This Court cannot state at this
juncture that the doctrine of equitable estoppel is applicable to the facts at
hand from this record as a matter of law.
4. CGL Policy
Investors concedes that it issued a CGL policy to Maria that was in effect on
the date of this accident. Investors describes this CGL policy as an excess
policy. The State argues that Investors is obligated to defend pursuant to the
terms of the CGL policy without regard to the existence of an OCP policy.
Investors responds by arguing that its duty to defend under the CGL policy is
not triggered without a coexistent OCP policy. In fact, at oral argument, this
Court specifically asked both parties to brief in their supplemental submissions
the issue of whether the phrases "that any other insurer has a duty to defend"
or "if no other insurer defends" contained in the CGL policy's "other insurance"
section mandated the existence of other insurance in the first instance. With
respect to the parties supplemental submissions on this issue, Investors
indicates it was unable to identify any case law on this issue, while the State
does not directly address the subject.
First and foremost, in this Court's view, Investors has not satisfied its
burden on this motion since:
[a] declaration that there is no obligation to defend could now properly be made
only if it could be concluded as a matter of law that there is no possible
factual or legal basis on which [Investors] might eventually be held to be
obligated to indemnify [the State] under any provision of the insurance
(Spoor-Lasher Co. v Aetna Cas. & Sur. Co., supra, 39 NY2d, at
876). In view of the fact that Investors itself raises the possibility that an
OCP policy is out there if USF&G renewed its earlier policy, then this Court
cannot state as a matter of law that there is no possible basis on which
Investors may have to indemnify - be it drop down coverage or only for that
amount in excess of the primary policy. As such, this Court declares that
Investors has a duty to defend the State in the instant action.
Moreover, the Court is not convinced on this record that the CGL policy issued
by Investors provides only excess coverage as asserted by Investors. First, a
true excess policy expressly requires basic coverage in specific amounts.
(Gladstone v Ritter Co., 133 Misc 2d 922, 927). Investors has not
pointed out any such language in this CGL policy. Secondly, the CGL policy's
own language states that its "other insurance" clauses are triggered "if other
valid and collectible insurance is available" which does not appear to be the
case. Furthermore, the policy's "other insurance-excess insurance" clause
indicates that it is only excess over certain specific coverages, namely fire,
extended coverage, builder's risk, installation risk, fire insurance for rented
premises, loss arising out of aircraft, autos or watercraft, none of which are
relevant here. In short, this Court is not convinced that this CGL policy
provides only excess policy.
Parenthetically, to the extent that Investors is also asking the Court to
determine at this juncture whether it is obligated to indemnify the State or,
stated another way, to drop down to cover losses that may be attributable to the
lack of a primary policy in the event that turns out to be the case, it is too
early to do so. More specifically, Investors requests that "[i]t be entitled to
a credit in the amount of the alleged limits of OCP policy to the extent that
Investors is determined to provide coverage to the State." (Supplemental
Affirmation of Amy C. Clauss, Esq., ¶ 10). In this Court's view, a
determination relative to the obligation of Investors "[t]o indemnify its
insured [under this CGL policy] would now be premature and must await the
resolution of the underlying claim." (Spoor-Lasher Co. v Aetna Cas. &
Sur. Co., supra, 39 NY2d, at 876).
5. Attorney's Fees
To the extent that the State's Third-Party Claim against Investors also seeks
an award of attorney's fees in connection with both the Investors Third-Party
Claim and the underlying claim, the Court notes that attorney's fees in
connection with declaratory judgments have been rejected in the Court of Claims.
(Sangirardi v State of New York, supra, 152 Misc 2d 423; CCA 27;
Springer v State of New York, Ct Cl., April 30, 1999, Silverman, J.,
Claim No. 95038, Motion No. M-58277).
Finally, Investors seeks permission to take an open commission of an
out-of-state nonparty witness, namely Michael Culnen located in New Jersey.
Although the need for this deposition on the specific issue of duty to defend
may now be moot it does seem likely that Mr. Culnen may have material and
necessary information relative to other issues, such as the indemnification
issue that has yet to be resolved. (Morgan v Dell Publ. Co., 185 AD2d
876). As such, the Court will grant Investors application for an open
Accordingly, for the reasons stated above, it is ORDERED that the State's
Motion for a Declaratory Judgment, Motion No. M-62856, is GRANTED and the Court
declares that Investors has a duty to defend the State in the instant action;
that Investors' cross-motion for severance, Cross-Motion No. CM-63062 is DENIED;
and Investors' motion for an open commission, Motion No. M-64113, is GRANTED.
Finally, the Court notes that it previously reserved the Claimant's right to
make a dispositive motion within 60 days following the date of filing of this
Decision and Order in the Office of the Clerk and reiterates here Claimant's
right to do so. The Clerk of the Court is directed to enter judgment
Binghamton, New York
HON. FERRIS D. LEBOUS
Judge of the Court
The State originally filed its motion on
December 18, 2000. An original return date of February 14, 2001 was scheduled,
then adjourned for oral argument scheduled for May 10, 2001. The return date
was further adjourned to allow for time for additional investigation and
supplemental submissions until August 8, 2001, with that date being adjourned to
September 6, 2001; then September 20, 2001; and then ultimately October 31,
The Stipulation of Discontinuance dated August
31, 1999, was filed in the Office of the Clerk on October 13, 1999.
Apparently an incorrect second page was
inserted as part of that original Certificate of Insurance exhibit.
Courts have agreed that the most analogous
cause of action to a declaratory judgment action is a breach of contract action,
which is an action at law to which the right to a jury trial attaches.
(Martell v North Riv. Ins. Co.
, 107 AD2d 948; CPLR 4101; N.Y. Const art I
Investors also relied on a facsimile from Crum
& Forster Insurance on April 7, 1999. (Exhibit 4 to Affirmation of Amy C.
Clauss, Esq.). This argument is without merit. Said facsimile states that Crum
& Forster Insurance issued an umbrella policy to Maria and contains the
statement that "We have been further advised that St. Paul [a/k/a. USF&G]
has assumed the defense of the State of NY under their OCP Policy."
.). The Court notes this facsimile is dated five months before
the Stipulation of Discontinuance between the State and USF&G acknowledging
that USF&G's policy had expired.
For instance, Policy Number 041597-1A appears
to correspond to an effective date of April 15, 1997, while Policy Number
041598-1A corresponds to an effective date of April 15, 1998.
Rather, Certificates #1 and #2 both contain
the following language:
[t]he subscribing insurance company, authorized to do business in the State of
New York, certifies that insurance of the kinds and types and for the limits of
liability herein stated, covering the work herein designated, has been procured
by and furnished on behalf of the insured contractor and is in full force and
effect for the period listed below.
Certificate #2 is signed by "Patti
Abbott-Bozzo, Acct. Exec." as "Signature of Authorized Representative", however
Ms. Abbott-Bozzo appears to be an account executive with The Turner Group as
shown on a separate letter. (Exhibits C & D to Affidavit of Michael Culnen,
sworn to August 2, 2001).