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DOWNEY v. ALLSTATE INS. CO.

July 22, 1986

GERTRUDE DOWNEY and GEORGE DOWNEY, Plaintiffs,
v.
ALLSTATE INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

 Brieant, J.

 By cross motions for summary judgment fully submitted on July 7, 1986, this Court is asked to decide whether Circular Letter No. 13, which was issued by the New York Superintendent of Insurance and distributed to insurance companies such as the defendant Allstate Insurance Company ("Allstate"), has the force and effect of law so as to create a private right of action in the insured in the event the letter's directions are contravened.

 The facts of this case are as follows. On December 10, 1984, plaintiff Gertrude Downey was injured in an automobile accident caused by the negligence of the other driver. The bodily injury liability insurance of that driver was limited to $10,000 per person, the statutory minimum, while plaintiffs' bodily injury liability limits per person were $100,000. By statutory definition, the other driver was an "uninsured motorist" because his liability limits were less than the liability limits provided by the plaintiffs' insurance policy. N.Y. Ins. Law § 3420(f)(2) (McKinney 1985). That statute, as amended in 1977, provided that an insured motorist could supplement his or her uninsured motorists insurance, from the then statutory limit of $10,000, up to the amount of his or her bodily injury liability insurance limits, not to exceed $100,000 per person and $300,000 per occurrence. At the time of the accident, the Downeys maintained an automobile insurance policy with Allstate that provided the maximum liability coverage of $100,000 per person and $300,000 per occurrence, as well as uninsured motorists coverage of $10,000 per person and $30,000 per occurrence. The Downeys' automobile policy had contained these limits since 1974.

 The insurance company for the other automobile settled the claim against it in the full amount of the applicable insurance. Thereafter, on October 18, 1985, Allstate tendered payment of $10,000 on the plaintiffs' claim under the uninsured motorists provision of their own policy.

 By this action, the plaintiffs now seek reformation of the insurance policy to include $100,000/$300,000 uninsured motorists coverage or a declaratory judgment that they are entitled to such coverage, although they had never previously requested it. They allege that Allstate had breached a statutory duty to offer this supplementary coverage to its insureds and that therefore these amounts should be implied in the policy to remedy the breach.

 Because the plaintiffs' action is predicated on two purely legal questions, i.e., whether Allstate owed the Downeys a statutory obligation to offer the supplementary uninsured motorists insurance and, if so, whether Allstate's communications with the Downeys satisfied that obligation, this action indisputably is ripe for summary judgment. Rule 56, F.R.Civ.P.

 As a threshold matter, this Court observes that there is no common law duty of an insurance company or its agency to advise a client of coverage not already provided in his or her policy. See, e.g., Callahan v. American Motorists Ins. Co., 56 Misc. 2d 734, 289 N.Y.S.2d 1005, 1008 (Sup. Ct. Orange Co. 1968). Thus, if the plaintiffs are to prevail, the duty to explain and offer the supplementary uninsured motorists insurance must be imposed by statute, regulation or some other binding state governmental ukase.

 In 1977, the New York Insurance Law was amended to provide that any policy affording liability insurance for motor vehicle related bodily injuries "shall, at the option of the insured, also provide supplementary uninsured motorists insurance for bodily injury, in an amount up to the bodily injury liability insurance limits of coverage provided under such policy," subject to a statutory maximum of $100,000 per person and $300,000 per occurrence. N.Y. Ins. Law § 3420(f)(2). This insurance would provide coverage to the insured, upon exhaustion by judgment or settlement of the other driver's liability insurance, when the limits of liability of the other driver's bodily injury liability insurance policies were less than the bodily injury liability insurance maintained by the insured. Id. Relying on Passaro v. Metropolitan Property & Liability Ins., 128 Misc. 2d 21, 487 N.Y.S.2d 1009 (Sup. Ct. Queens Co. 1985) and Garry v. Worldwide Underwriters Ins. Co., 120 Misc. 2d 91, 465 N.Y.S.2d 483 (Sup. Ct. Erie Co. 1983), the plaintiffs argue that the quoted language requires the insurance companies to offer this coverage to the insured. This Court cannot agree.

 As elucidated by the legislative history that plaintiffs cite in support of their contention, the statute merely requires that "this new coverage be made available in the voluntary market." Memorandum of State Executive Department, 1977 N.Y. Legis. Ann. at 2446 (emphasis added). In other words, under this statute, no insurance company will be permitted to refuse to provide supplementary uninsured motorists insurance if the insured requests it. If the state legislators had intended any other meaning, they were capable of giving it expression. To infer an ambiguity where none exists in order to justify the plaintiffs' construction would turn the canon of plain meaning on its head.

 Nor are the Passaro and Garry cases instructive. Neither case was addressed to the issue before this Court, and no analysis accompanies the courts' declarations that the statute imposes such a requirement. The dictum upon which the plaintiffs rely in Passaro merely prefaces the court's discussion whether passengers are entitled to be paid uninsured motorist benefits under § 3420(f)(2). Passaro, 487 N.Y.S.2d at 1010. In Garry, the court was asked to consider whether an automobile insurance policy may reduce a claimant's supplementary coverage by the amount he recovered on the other driver's liability policy, even though his damages presumably exceeded the amount of his supplementary coverage. Although the court invalidated that practice, in light of the statutory requirement to offer this sort of supplementary coverage," the court relied on the fact that the insured was not notified of this offset policy and that the coverage purchased did not accurately reflect the amount of proceeds a claimant actually would be able to recover. Garry, 465 N.Y.S.2d at 484-85. The essence of the decision was that the offset contravened the statute's requirement that the insurer provide the coverage, at the insured's election. That case did not consider the requirement alleged here that the insurer offer it in the first instance. Therefore, this Court is not obligated to accept this dicta as dispositive of this case.

 The plaintiffs assert, however, that this requirement has been acknowledged, and indeed amplified, by the Superintendent of Insurance, who had issued Circular Letter No. 13, dated November 3, 1977, to all insurers licensed to write automobile insurance in New York. Addressing itself to the "implementation" of the new uninsured motorists provision and other contemporaneous amendments, the letter informed its readership that "Section 167(2-a) [now numbered Section 3420(f)(2)] of the new statute requires insurers to offer supplementary uninsured (or 'underinsured') motorists coverage to their insureds," and imposed certain notice requirements and deadlines by which such offers must be made. Specifically, the letter read in pertinent part:

 
Insurers must furnish their insureds with information which provides an adequate explanation of this new coverage. Insurers must also furnish the estimated or approximate costs of the various coverage limits available to insureds, and an appropriate form which the insureds may use to request this coverage.
 
The opportunity to request this coverage shall be afforded to insureds with policies issued or renewed with effective dates on and after January 1, 1978, and thereafter at subsequent annual anniversary dates. Insureds with policies issued or renewed with effective dates from December 1, 1977 through December 31, 1977 inclusive, must be offered this additional coverage and explanatory information as soon as ...

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