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ALLSTATE INS. CO. v. MAZZOLA

July 18, 1997

ALLSTATE INSURANCE COMPANY, Plaintiff, against KIERAN MAZZOLA and FIRST FIDELITY LEASING GROUP, INC., Defendants.


The opinion of the court was delivered by: SCHEINDLIN

 SHIRA A. SCHEINDLIN, U.S.D.J.:

 On July 19, 1996, Plaintiff filed a subrogation action *fn1" to recover $ 83,131.22 of the $ 133,637.22 in first-party benefits paid to its insured. Defendants seek summary judgment under Fed. R. Civ. P. 56 on the ground that, inter alia, neither New Jersey nor New York law provides Plaintiff with a viable right of action. For the reasons stated below, summary judgment is granted.

 On July 21, 1993, Kevin Hall and his parents, Robert Hall and Gladys Hall, were passengers in a New Jersey-registered Jeep Wrangler operated by Kieran Mazzola and owned by First Fidelity Leasing Group ("First Fidelity"). Royal Insurance Company of America ("Royal") insured the automobile and the driver through a policy issued to Kim Lewis Mazzola and Carole Mazzola, Kieran's parents. This policy, which was purchased in New Jersey, provided coverage of $ 250,000 per person and $ 500,000 in the aggregate as well as no-fault personal injury protection ("PIP") benefits. On an exit ramp of the New York State Thruway (I-87) at Ramapo, New York, the Jeep collided with a Dodge sedan driven by Marie Solimine. See Defendants' Memorandum of Law ("Defs.' Mem."), at 2. In that accident, Kevin Hall suffered serious burns. His medical expenses totaled $ 133,637.22 and were paid by Allstate Insurance Company ("Allstate") under the no-fault insurance provisions of the Personal Auto Policy issued to Robert Hall.

 On August 18, 1994, Kevin Hall, Robert Hall and Gladys Hall filed a Complaint against Mazzola, First Fidelity, Royal, Solimine and others in the Superior Court of New Jersey, Law Division, Essex County. See Defs.' Mem. at 2. In September 1994, a one million dollar settlement was effected among the Halls and Mazzola, First Fidelity, and Royal. As a result of the settlement, the action was dismissed with prejudice as against these defendants. See Defs.' 3(g) Ex. D. The following month, the Halls signed a release that extended to and included all of the Halls' claims arising out of the accident. See id. Ex. E.

 On July 19, 1996, Allstate instituted arbitration proceedings against Royal to recover the no-fault medical payments of $ 133,637.22 pursuant to Section 5105(b) of the New York Insurance Law. *fn2" The arbitrator (Mary Carol Bate of Arbitration Forums, Inc.) awarded Allstate $ 58,637.22 to be paid by Royal. On May 9, 1997, the Arbitration Forums' counsel (Donald L. Booth) voided the award for "lack of jurisdiction." See id. Ex. L. Plaintiffs then filed a petition to modify the award which is currently pending in the Supreme Court, King's County. See id. Ex. K.

 II. APPLICABLE LEGAL STANDARD

 A party is entitled to summary judgment when there is "no genuine issue of material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The moving party carries the initial burden of demonstrating the absence of any genuine issue of fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). If the moving party satisfies its burden, then the burden shifts to the non-moving party to proffer evidence demonstrating that a disputed issue of material fact exists. See Weg v. Macchiarola, 995 F.2d 15, 18 (2d Cir. 1993). Finally, summary judgment is improper if "as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir. 1994).

 III. DISCUSSION

 It is beyond cavil that a subrogee has no more rights than those possessed by the subrogor. By executing the release, the Halls waived all of their common law rights against Defendants. Thus, Plaintiff only seeks recovery under no-fault statutes.

 A. Doctrine of Equitable Subrogation

 "Subrogation is the right one party has against a third party following the payment, in whole or in part, of a legal obligation that ought to have been met by the third party." 2 Allan D. Windt, Insurance Claims and Disputes (1995) § 10.05. Thus the doctrine of equitable subrogation *fn3" allows an insurer that has paid benefits to its insured to "stand in the shoes" of that insured and to pursue claims the insured may have against a tortfeasor. An equitably subrogated insurer has only those rights of recovery as would its insured had no benefits been paid. See Great American Insurance Co. v. United States, 575 F.2d 1031, 1034 (2d Cir. 1978) (Subrogation "is an exclusively derivative remedy which depends upon the claim of the insured and is subject to whatever defenses the tortfeasor has insured against."). See also Gibbs v. Hawaiian Eugenia Corp., 966 F.2d 101, 106 (2d Cir. 1992).

 Here, Allstate's claim against Defendants rests on its status as the equitable subrogee of the Halls' right of recovery. Thus, Allstate may recover from Defendants only to the extent that the Halls would do so. Similarly, to the extent that the Halls are barred ...


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